Condo Association Insurance | Morrill Insurance Agency of Norwood MA

What Directors and Officers should consider when purchasing Condominium Association Insurance

The insurance needs of a condominium association are well understood. Following is a list of NECESSARY COVERAGE to consider and A MORE COMPLETE COVERAGE SUMMARY.

The basic coverage that should be considered by the Directors and Officers of the Condominium Trust or Association are outlined as follows:

  1. Real Property Coverage-The Buildings and Fixtures
  2. Personal Property Coverage-Contents used for the service of the facility
  3. Employee Dishonesty Coverage
  4. Association Liability Insurance
  5. Directors and Officers Liability Insurance
  6. Non-Owned Auto Liability
  7. Workers Compensation
  8. Pollution Liability
  9. Pollution Remediation Coverage

The coverage described above will cover residential condominiums but if the facility includes club membership, liquor sales, marinas or other facilities other than just residential units then additional coverage must be purchased.

Property Insurance Basic property insurance coverage is broadly
worded and will cover damage to both Real and Personal Property but there are many causes of loss that are excluded:

Property insurance excludes damage caused by:

  • Flood,
  • Earthquake & Earth movement,
  • wear and tear,
  • war,
  • nuclear damage,
  • acts of Terror,
  • other damage to property which occurs over a long time duration, such as mold, and damage caused by insects or vermin or
  • loss caused by the dishonest acts of the employees of board members

Certain Property is either excluded or limited in scope:

  • Piers
  • Wharves
  • Foundations
  • Money & Securities
  • Money, valuable minerals and metals
  • Auto, boats and aircraft

Many of these excluded causes of loss and excluded property can be covered either by endorsement or under a separate policy.

Employee Dishonesty Insurance
Because money is excluded as covered property a need exists to cover theft of money and securities by members of the Condominium board or Management companies who have access to funds or valuable property.

Association Liability Insurance
With Liability Insurance the insurer agrees to cover the condominium association against claims involving Bodily Injury and/or Property Damage to tangible property. Your legal costs to defend these claims are also covered.

Coverage shall not apply to:

  1. Loss or damage to property owned by you rented to you or in you care custody or control,
  2. Loss caused by operation or use of Automobiles, watercraft or aircraft,
  3. Environmental Claims both on and off sight,
  4. Nuclear damage
  5. Claims covered by any Workers’ Compensation statutes, Longshoremen & Harbor workers Act or other similar federal or state statutes and any liability to employees of the Condominium Association,
  6. Liability associated with the sale or distribution of alcoholic beverages, and
  7. Associated with any Acts of War

Directors and Officers Liability Insurance
Because the Association Liability coverage only applies to Bodily Injury and/or Property Damage, the Trustees or Directors and Officers need liability insurance if the unit owners claim damages for pure financial loss based on the errors and/or omissions in the administration of the Condo Association business.

For Example the Trustees fail to purchase insurance to cover against theft of Condominium funds by a property management company. (See Employee Dishonesty coverage) The loss of this money could cause a claim by the unit owners against the Trustees, Officers, or Directors of the Condominium Association.

Non-owned Auto Liability Insurance
Because the Association Liability Coverage excludes liability arising out of the operation or use of an Auto, coverage must be considered. For example if an officer director or trustee is involved in an accident using his or her personal auto for the benefit of the Condo Association, the vicarious liability that my result will not be covered unless the non-owned Auto coverage is purchased.

Workers’ Compensation Insurance
Even if you don’t have Employees you still need this coverage. If for example you call a plumber to repair some damage and the plumber has no Workers’ Compensation Insurance the Association may be deemed to be the employer at the time of the injury.

Pollution Liability Insurance
This Coverage applies to the Association’s liability arising out of a pollution incident that occurs on Association property and that damages the property of others. A pollution incident that damages the neighbors’ ground or well water will be covered by Pollution Liability Insurance.

Pollution Remediation Insurance This coverage is intended to cover the cost of cleaning up and remediating the association’s own property caused by an environmental incident.

The summaries of coverage described above are intended to provide a cursory understanding of coverage provided and in no way are these descriptions intended to effect or alter the terms of the actual policy.

Estimated Insurance Cost for Coverage listed above Except Pollution and Workers Compensation.