A condominium association is defined by its unique ownership model. Members own individual units along with equal portions of the building and common areas. Condo associations are often self-governed by an association that establishes bylaws and oversees management of the community.
When considering condo association liability coverage, it is important to remember the risk exposures generated by this joint ownership arrangement. In order to ensure comprehensive protection, associations should consider adding three separate forms of liability insurance.
General Liability: Typically included in a standard condo policy (along with property damage coverage), general liability insurance provides for coverage in case of injuries that might occur in the association’s common areas.
Directors and Officers (D&O): Most condo associations are governed by unpaid volunteers. In the event of a claim being lodged against one of those volunteers–a not infrequent event given the litigious climate of today’s society–the association is held financially responsible. D&O insurance is a vital part of association liability coverage because it provides coverage for claims lodged against board members, trustees, volunteers and committee members.
Commercial Umbrella: In the event of a particularly large liability claim, the policy limits imposed by the condo association’s general liability and D&O policies may not be enough. In order to safeguard the long-term financial stability of an association, the cushion provided by a commercial umbrella policy is an essential part of any association liability coverage.