10 Things to Know About Condominiums

1. The condominium association owns and insures the outside structure of the condominium building. The condominium master policy agreement (bylaws) stipulates what part of the structure is owned and insured by the association and what part makes up the individual’s unit that the unit owner is responsible for insuring. For instance, the bylaws may stipulate the unit owner is responsible for everything on the inside of the drywall. —Terry McConnell, vice president, Personal Lines Underwriting at Erie Insurance
2. There is no standardization of master policy language so it’s vital to understand the specific agreement in order to know what the unit owner’s insurable interest is in the condominium unit. To complicate matters, some states have enacted Condominium Acts which supersede the master policy agreement and stipulates insurable interests for the association and unit owners. A unit owner should look for a policy that offers coverage for personal property, real property/building additions and alterations, personal liability and loss assessment. —Terry McConnell, vice president, Personal Lines Underwriting at Erie Insurance
3. Over the years, condominium owners associations have been moving toward policies that provide less coverage for a lower cost. This shifts more of the responsibility for loss or damage to the unit owners and the loss assessment coverage in their policies. —Pete Ducich, senior director, Personal Lines for Farmers Insurance
4. Reviewing the Unit Owner’s Building Property coverage in their policy with their agent is also a good idea to assure that individual unit owners have a clearer understanding of the coverage they may need in the event of a loss. —Pete Ducich, senior director, Personal Lines for Farmers Insurance
5. The number of community associations in the U.S., including homeowners associations, condo communities and cooperatives, grew from approximately 222,500 in 2000 to 333,600 in 2014, with condo communities representing up to 45%. —Community Association Institute
6. Some 66.7 million people lived in common-interest communities, including homeowners associations, condo communities and cooperatives, in the U.S. in 2014. States with the most associations are Florida (47,100), California (43,300), Texas (19,400) and Illinois (18,150). —Community Association Institute
7. In Florida, Citizens Property Insurance Corp. plays a critical role insuring condos, most notably older units concentrated close to the water, but Florida’s private insurance market is increasingly robust. —John Rollins, chief risk officer, Citizens Property Insurance Corp.
8. Citizens Property in Florida continues to propose modest rate increases for condo unit-owners (HO-6) policies under a legislative mandate capping annual increases at 10%. This is due to historical inadequacies that need to be addressed for several years to come. —John Rollins, chief risk officer, Citizens Property Insurance Corp.
9. In New York City, some carriers are still treating parts of Manhattan as coastal property and won’t write in certain areas near water. Company inspections continue to be an issue for insureds and brokers. And some carriers no longer write condo buildings that have bars or restaurants because of what they perceive as added exposure to the property or their liability. —Leslie Rogoff, marketing manager at Madison Avenue Brokerage and a director for Professional Insurance Agents of New York State
10. Many times, unit owners do not understand the interaction between their individual policies and the master policy. One area where this comes into play is in coverage for loss assessments. Condo owners should understand what their obligations are in the event of losses to common property. That way, they can work with their insurance professional to ensure adequate coverage. —Bryan Cook, senior assistant vice president at Amica Mutual Insurance Co.