There are two set of documents that are affiliated with condominium ownership, the Deed, which describes the physical real estate you will be owning, and the Bylaws, which dictate how the condominium will be run on a day to day basis.
The bylaws describe how the Association will be structured and how it will be governed. The Master insurance policy is secured by the Trustees for the entire Association, and it includes coverage for General Liability, Crime, Directors and Officers Liability, as well as property coverage for the physical structures. Regardless of what your ownership is of the physical property you are deeded, the bylaws will dictate the extent that the master policy covers a unit for physical damage.
The majority of condominium association bylaws that we have reviewed contain wording that makes the Trustees secure insurance for all of the units, including all fixtures installed therein, but not including furniture, furnishings, or other personal property supplied by the unit owner. Thus should there be a property loss the condominium master policy, in most cases pays for the damage to the units, regardless of your ownership.
Trustees and Unit Owners alike must take the time to truly understand what the bylaws dictate in this regard, thus being able to arrange their respective policies correctly so they will respond correctly in a loss situation.
When arranging an individual unit owner policy, read the bylaws, take note of the association property deductible, because this may become your responsibility if a loss is restricted to your unit. Purchase an “HO-6” policy and include dwelling coverage in the amount of the association’s deductible, personal property for any items you would take with you if you were to move. Be sure and add personal liability and loss assessment coverage as well.
Written by: Arthur B. Fair, III, CIC, LIA, CPIA
President, Fair & Yeager Insurance Natick MA