What You Need to Know about Association Insurance

Condominium associations are hampered by the cost of insurance. It is important that the board of directors understand the basics of association insurance before they evaluate the different bids. Below are the things that you need to know about the coverage that a condominium association must have, as well as other coverage that you should consider.

Know the State Law for Minimum Association Insurance Coverage

The first thing that a condominium association should do is to check the state law regarding insurance minimums for condos. In Florida for instance, condominiums fall under the section 718 of the state statues. It overrides most of the authority given to condominium associations, and must insure the property based on its value that is appraised every 36 months. It is a replacement cost appraisal, and not a market value appraisal.

Read the Condo Association Governing Documents

Aside from the state’s statute, you should also consider your condo association government documents. This will ensure that the association insurance coverage is compliant with the documents. The requirements also serve as a minimum standard for the insurance. When talking to a broker, it is important to bring your governing documents so that the broker will understand what the association insurance needs to cover.

Brokers often read the governing documents to find out what the association insurance will cover. There are instances in which insurance covers basic carpeting and cabinetry, but will not cover when people make the unit on their own. The broker will ensure that the board understands the types of insurance they need, and what coverage is adequate. The broker will break down the requirements of the insurance coverage so that they fully comprehend the insurance. Condo associations require special insurance, and a professional insurance agent who is familiar with condo association insurance will be able to help the board through the entire process.

Determine what the Association Owns

After looking at the statute and governing documents, the next step is to find out what the association owns, as well as what it is responsible for. A developer-controlled association requires a different insurance compared to an association controlled by the unit owners. A developer-controlled association requires a policy that is property driver instead of liability driven.

Amount of Property Coverage Needed

When buying property insurance, it is important to find the right amount of coverage. However determining the amount can be hard. One should determine how much it would cost to replace the building in case it was destroyed by fire. One way to get a replacement cost appraisal is by consulting an architect or a contractor.

These are the things you need to know about getting association insurance. One thing to keep in mind is that insurance companies operate differently. It is important to compare several policies first before finalizing your decision.


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