Condominium Associations

Many state statutes and condominium bylaws require the purchase of reasonably available property insurance which covers all direct physical risks of loss on an extended and replacement cost basis. One issue I have heard associations and their insurance agents ask: “Is flood insurance reasonably available” so that it has to be insured.

This question was recently answered in Porter v. Beaverdam Run Condominium Association.1 The holding is significant:

[W]e conclude that the Association is obligated by the Declaration and the Condominium Act to maintain insurance against all risks of direct physical loss which are commonly insured against, to the extent that such insurance is reasonably available. We further conclude that flood is a risk of direct physical loss which is commonly insured against for residential buildings located in a FEMA-designated flood zone. Accordingly, we conclude that the Association has an obligation to provide flood insurance for the Community’s buildings located within the FEMA flood zone each year when such insurance is reasonably available.

Condominium associations should be very wary that some insurance agents could leave the Board and Association liable for uninsured or underinsured losses by selling cheap insurance. These agents compete on premium price and propose packages of insurance that do not include commonly available coverages, especially sufficient law and ordinance coverage, flood, and earthquake coverage.

Thought For The Day

“The quality, not the longevity, of one’s life is what is important.” 
—Martin Luther King, Jr.


1 Porter v. Beaverdam Run Condominium Association, No. COA17-793, 2018 WL 2011355 (N.C. App. May 1, 2018).

Continuing my state-by-state review of mandatory condominium insurance requirements, this post will look at Indiana—The Hoosier State.

Condominium insurance requirements in Indiana are detailed in the Indiana Code. Section 32-25-8-9 discusses insurance and co-owners, stating in part:

Sec. 9. (a) The co-owners, through the association of co-owners, shall purchase:

1. A master casualty policy, payable as part of the common expenses, affording fire and extended coverage in an amount consonant with the full replacement value of the improvement that in whole or in part comprises the common areas and facilities; and

2. A master liability policy in an amount:
a. Required by the bylaws;
b. Required by the declaration; or
c. Revised from time to time by a decision of the board of directors of the association.

The section also states that the association must maintain a policy covering land or improvements on which the association has or shares ownership or other rights.

The Indiana Code contains no language regarding waiver of subrogation rights, nor does it contain any language prohibiting unit owners from obtaining their own insurance.

 

Making the proper insurance claim to recover damages to your condominium unit following a loss can be a daunting task. The first step to recovery is determining the origin and extent of the damage. Knowing the source of the damage and the extent of the damage will determine coverage and the insurance policies at issue. The next step is to review the applicable insurance policies, association bylaws, and your state’s condominium association statute. These instruments outline required coverages and allocate responsibilities between unit owners and the association. If the damages to an individual unit exceed policy limits then unit owners may find additional coverage after review of the master policy and association bylaws. The largest obstacle to successful recovery often deals with subrogation. A waiver of subrogation provision prevents the insurance company from pursuing legal action against the real party responsible for the damage.

Continue Reading State-by-State Condominium Subrogation Laws: Florida

The New Jersey legislature created the Condominium Act to set out guidelines that condominiums must follow. Title 46 of the New Jersey Statutes addresses property specifically, and section 46:8B-14 addresses the responsibilities of the condominium association.

Continue Reading Is Your New Jersey Condominium in Compliance with the Law? Mandatory New Jersey Insurance Requirements

 

Following a major loss event, like a hurricane, insurance companies usually receive a higher volume of reported claims. When an insurance company is overwhelmed with the number of claims, the loss event is remotely located, or specialized knowledge is required, it generally hires independent adjusting firms to prepare an estimate of the damage. In adjusting insurance policy claims, independent adjusters represent the interest of the insurance company and prepare estimates at their direction.

Continue Reading Determining Whether the Insurance Company’s Estimate is Fair and Accurate

When damages occur in condominiums a frequent dispute is how to determine if damages will be covered under the unit owner’s insurance policy or under the Board’s insurance policy for damages in common areas of the condominium. For example, in National Insurance Company v. Seguros Triple S,1 the Puerto Rico Appellate Court discussed this issue when water that escaped from a damaged bathroom of one of the unit apartments caused damage to the electric panel of the elevators of the condominium.

Continue Reading Puerto Rico: Liability of Unit Owners When Damages Extend to Common Areas of Condominium vs Subrogation Clauses