The governing documents1 of most, if not all, community interest developments/homeowners associations contain provisions setting forth the rules regarding real property insurance. Typically, an Association is required to obtain and maintain a master policy of fire insurance, naming the Association itself as the insured, for the full insurable value of all of the improvements within the development (the common areas and common structural components of the building including the roofs, exterior walls and exterior plumbing). Individual unit owners are prevented from separately insuring their units or common areas against loss by fire or other casualty covered by the Association’s insurance but may insure their own personal property or improvements they made to their own units.

The primary purpose of these provisions is to avoid double coverage by allocating insurance responsibility between the Association and individual owners of a condominium unit. If both the master and individual policy cover the same loss, the unit owner may be compelled to pay twice for the same insurance—once through homeowners association dues and then again through individual policy premiums. Additionally, double coverage can lead to disputes over control of proceeds, where the association could be faced with the obligation to repair when a portion of the insurance proceeds is controlled by a member.2

So what happens when a unit is damaged by water or fire? May the unit owner make claim under the Association’s master policy, or is that right to submit a claim solely within the purview of the Association? In Gantman v. United Pacific Insurance Company,3 and Adelman v. Associated International Insurance Company,4 the courts held that the individual unit owners were not insureds under the Association’s master policy and, consequently, could not make claims or sue thereunder.5 (Gantman held that an individual homeowner had no standing to sue the insurer on a policy under which the homeowner was neither an insured nor an express beneficiary.6 Adelman held that the insurer owed no duty of care to individual owners relating to the performance of its indemnity obligation owed to the insured association.7)

Thus, there are two lessons to be learned. First, unit owners must have their condominium policy reviewed to ensure their separate interests are covered to the fullest extent possible. Second, it is important for unit owners to understand the interplay between the Association’s CC&Rs, the Association’s master policy, and their own separate interests. Questions surrounding these issues should be addressed to an experienced Association attorney with knowledge of insurance policies.


1 An Association’s governing documents typically include the Declaration of Covenants, Conditions & Restrictions (“CC&Rs”), Bylaws and Rules and Regulations.
2 Palacin v. Allstate Ins. Co. (2004) 119 Cal.App.4th 855, 863-864; Schiller v. Community Technology, Inc. (1980) 78 A.D.2d 762, 433 N.Y.S.2d 640, 642.
3  (1991) 232 Cal.App.3d 1560.
4 (2001) 90 Cal.App.4th 352.
5 Gantman, supra, at pp. 1566-1568; Adelman, supra, at p. 356.
6 Gantman, supra, at pp. 1563, 1566-1567.
7 Adelman, supra, at pp. 359, 370.

  • Stephen Sarasohn

    So, wouldn’t the Gantman decision highlight the benefit of the homeowner having his own insurance, in direct contradiction to the preceding paragraph?

  • Glenn Rosen

    Mr. Sarasohn, of course the unit owner should have his or her own condominium owners policy; there is no contradiction. The point of Gantman and Adelman is that the unit owner does not have a right to recover under the association’s master policy. The association may tender a claim for loss and/or damage to a unit and provide the benefits to the unit owner if that is the decision of the board.

  • Condo Association Insurance

    Very good article! Thank you to the author for it! It is interesting and useful information. I will advise my friends to read it.

  • CjCampbell

    What can you do if you find out the condo was sold to you and you do not have the right policy.. And when you informed the Association they refused to get the right coverage.

    I had a Ho3, and I should of had a Ho6..The association knew this but they decided they did not want to go by the rules.

    What can I do, I want out of here!