Condo Associations

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When looking into insurance for your condo association, there are several areas of need that must be taken into account. This type of policy usually helps cover the structure of the building as well as areas of common use. But depending on the association’s bylaws or existing policy, that coverage may or may not extend to the inside of individual units.

Condo association coverage may also be dependent on state laws as well, so it’s important to understand the differences between a condo association’s policy and a condo owner’s insurance policy.

First, here are two important types of condo association policies:

  • Liability Protection helps cover legal or medical costs if the association is hit with a lawsuit. For example: If someone is injured through potential negligence on the part of the condo association, this insurance helps defray the costs of either fighting the lawsuit or potentially paying damages.
  • Property Coverage provides protection for damage to property owned by the association in the common areas of a condominium. Usual areas covered may include the building itself, roof, elevator, basement, courtyards, or walkways.

However, condo associations must look at other types of insurance coverage as well, said Emerson Poort, vice president of INGUARD, told the Huffington Post. This is especially important to limit the association’s liability and to protect its physical assets.

“Condo associations need building insurance, general liability for the building’s common area, and directors and officers (D&O) insurance that pays special attention to the retroactive and/or pending and prior litigation dates, if applicable,” Poort said during a 2016 interview. “Retroactive dates are the starting date of coverage; any event that happens prior to this date is not covered by the policy. Pending and prior litigation dates refer to any lawsuits before the policy’s coverage date. Associations should request pending and prior litigation dates are as far back as allowed. Associations should also have crime coverage, including employee dishonesty coverage, to cover non-compensated officers, property managers, and employees.”

Poort’s listing of ‘employee dishonesty coverage’ is extremely important.

Sometimes businesses overlook this kind of coverage because it’s easy to hide. Insurance Hub estimates it can take up to two years to detect a dishonest employee. Nearly one-third of bankruptcies can be attributed to employee crime. Also, of critical importance, is that your Employee Dishonesty coverage apply to “third party” property managers as well.

This type of insurance may be called “crime coverage, “employee dishonesty bond,” “fidelity bond” or even “crime fidelity insurance, and–especially if you have employees who deal directly with condo owners or tenants–it’s a good idea to have it.

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