Insurance coverage & HOA's governing documents?

You should have been given a copy of your Declaration (the document that sets your building up as a condo) at the time of closing. This document is normally recorded and you can obtain a copy from whatever public official records deeds. The Declaration ought to dictate the minimum insurance coverage the association is required to have. The board for your condo may have also adopted rules requiring additional coverage.

There may also be state laws that govern insurance coverage for a condo.

As for "a document that plainly states the insurer covers the Common Areas," good luck with that. I have yet to see an insurance policy that states anything plainly.

There is a statement in your Covenants and Restrictions or your Articles Incorporation documentation. Our requires a minimum of a 1million dollar insurance for our HOA and any contractors must also maintain a 1 million dollar policy. Only licensed and insured contractors for our HOA.

What is the end game of knowing this information? Are you wanting to change the coverage or cancel it? Let's say you get this information...Now what?

Yes, ours has minimums spelled out as well. That really has little to do w my question.

I actually don't know... just that, in insurance and contracts, it seems to me the devil is in the details, so I simply would like to see how it is stated. And it is driving me nuts that an industry that is founded on splitting hairs, has this arrangement that, seemingly, most people acknowledge (governing docs/common areas = what is covered), but is not put in print.

Posted By LarryB13 on 03/12/2013 9:42 AM

I do not see it addressed directly in the policy documents I have at hand. In one of the insurance docs they repeatedly refer to Declarations, but, because of the content, I think they are referring to their "declarations," not the HOA's.

BTW, thanks to all responders.

Frank:
I think you should look at the actual policy to make sure your home is insured at all. Just because your governing documents require a certain amount of insurance doesn't mean your board actually did it.

There is the story of the HOA where a board member was stealing insurance money and only insuring half the development. Everyone found out when there was a fire.
Jeanne

Which insurance are we talking about for sure? Is it the HOA's or your personal home insurance? You referenced common areas but what is on your common areas? Is it just grassy area or do you have amenities like a pool or tennis court? Your HOA may just have insurance to cover liability only to protect the board members or lawsuits. Not all common area needs insurance if it is just like small landscaping.

If it is your whole condo building you should have your own insurance and the HOA their own. Which I think your getting at. That may include things like the roof and outside walls. Your insurance would be inside walls and your belongings. I liken it to renters insurance except youra owner. So if a fire burns the place down the HOA will protect itself for the actual structure but your insurance could cover the home value and contents.

Our community is 10-years old. During that period we have obtained coverage from several insurance companies. Also during that period we found out that once our policy did not meet the coverage requirements of our Declaration and once (another company) our coverage did not comply with our state insurance law.

We were able to discern these significant errors only by reviewing in detail (and with great pain) the policy declaration and fine print. Had these errors not been discovered, it is hard to imagine whether the Association or the insurance company would have prevailed in a claim dispute.

As Reagan said, "trust but verify".

The Common Area is, basically, all of the building outside of the paint or wallpaper on the walls of each unit/apartment. The question is not about whether the HOA has adequate insurance or whether we have enough personal insurance, I simply like to see things in print in official documents. The agent tells me that the policy is dictated by our governing documents. I say, "Fine, I believe you, but could I see the paper where the insurer and insured agree to this."

And what I am shown after numerous emails and phone calls is pretty much nothing. All she has been able to offer is this from an endorsement to "CONDOMINIUM ASSOCIATION COVERAGE" -
(6) Any of the following types of property contained within a unit, regardless of ownership, if your Condominium Asso-ciation Agreement requires you to insure it:
(a) Fixtures, improvements and altera-tions that are a part of the building or structure; and... (etc.)

What I had hoped to find was a cover letter or insurance document that said ***something like***,
"Company agrees to insure Condo Zees property (etc.) referred to as Common Areas as described in Condo Zees' governing documents and as per terms detailed adfinitum in Company's 40 pager, Terms & More Terms, Etc. Etc. document."

But, evidently, no insurance company or agent can even imagine such a piece of paper - and this blows me mind!!!

FrankF3, I do not know Indiana State Statutes that apply to Condominiums, but “Master Policy” Insurance requirements often start with the State Statute.

For example, Vermont and Connecticut have somewhat similar State Statutes based on the UCIOA (Uniform Common Interest Ownership Act), but our (VT vs. CT) Insurance requirements are very different.

I assume your concern is with “Building Coverage” and “building replacement cost” insurance.

I do not work in the Insurance Industry. What I know (or think I know) is only what I have learned as a Board Member. Starting with Vermont: Vermont has two State Statutes – one an “early” statute and a second, later(current) Statute.

For a Condominium under the later, current statute, 27A V.S.A., part of the Unit description reads:

§ 2-102. Unit boundaries Except as provided by the declaration in a common interest community: (1) if walls, floors, or ceilings are designated as boundaries of a unit, all wallboard, plasterboard, plaster, paneling, tiles, wallpaper, paint, finished flooring, and any other materials constituting any part of the finished surfaces of the unit are part of the unit, and all other portions of the walls, floors, or ceilings are part of the common elements;

For a Condominium under Title 27, V.S.A. Ch. 15 (the early statute): the Condo Unit is defined from “the paint” inward, and under this statute the wallboard, plasterboard, etc. is NOT part of the Condo Unit but rather is “Common Area” to be insured by the Master Policy.

And then there are other states that define Unit Boundaries as: Except as provided by the declaration: (1) If walls, floors, or ceilings are designated as boundaries of a unit, all lath, furring, wallboard, plasterboard, plaster, paneling, tiles, wallpaper, paint, finished flooring, and any other materials constituting any part of the finished surfaces thereof are a part of the unit, and all other portions of the walls, floors, or ceilings are a part of the common elements.

In those States, as you can read, the Unit also includes “all lath, furring” etc. as well as the “wallboard, plasterboard”, etc.

1. From what you posted, your Condo Units are “from the paint” inward.

2. So for starters, the Insurance Company needs a copy of your Declaration (CC&Rs) to determine what portions of the Building is Common Area that needs to be insured by the Master Policy, and what portions are to be insured by the Unit Owner under their personal HO-6 Policy.

3. Before our master policy was written, the Insurance Company had all our buildings appraised, and our Policy states the “Limits of Insurance” for each building in dollars. Also our buildings are insured for “replacement cost”.

4. Every so many years the Insurance Company reappraises. In the interim we have an automatic built in Percentage Increase to keep up with increased building costs.

5. However, I have never seen the appraisal breakdown – which is apparently part of what you are looking for. You have brought up some interesting points.

6. We also have additional coverage for each building such as “Back Up of Sewer and Drain Water”. And also coverage for Outdoor Signs, Trees, Shrubs, Plants, and Lawns, all listed under the “Property Declarations” portion (page) of the Policy, for each of our individual buildings.

7. There is more – built in cabinets, as built, betterments, etc, - whose responsibility to insure, the Association or the individual Unit Owner, some of which is spelled out in State Statutes, but this post is getting too long - so to be continued.

8. Hopefully I may have answered a question or two. And I am definitely going to read our Master Policy more closely.

Hi,

After a closer examination of our policy "BUSINESSOWNERS COVERAGE FORM" which lays out Coverage, Exclusions, etc., searching for "declarations," I find that most references seem to be refering to our HOA's Declaration document; however, entries such as -
"I. Premiums
2. The premium shown in the Declarations was computed based on rates in effect at the time the policy was issued. On each renewal, continuation or anniversary of the effective date of this policy, we will compute the premium in accordance with our rates and rules then in effect."
certainly is not referring to our Declaration because there is no premium computed in it.

Unfortunately, the term "the Declarations" is not defined in the BUSINESSOWNERS COVERAGE FORM and for some reason they chose not to call our HOA's Declaration the "insured's Declaration." Perhaps that would have been too simple.

In a number of documents issued by the insurer (they look like a financial statement or invoice to me), which are primarily lists of our policy's components and their premiums have this printed at the top, between their address/logo and our policy number:
NAMEOFINSURER SMART BUSINESS PACKAGE POLICY DECLARATION
thus adding to my confusion. In addition to seeing this on many of these statements, I assumed this might indicate that the insurer had more detailed "Declarations" which affected our ploicy, but which I had not been able to locate. Oh, well... back to the real world.

Thanks to all for your help and time. EllieD's post gets a gold star for her extra research, thorough, orderly presentation and impressive word count. 'twas a real pleasure reading it. Have a nice day all.

Frank