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Condo Association – Co-op Master Insurance Policy

Insurance protection all under one roof!

The purpose of a condo association's master insurance policy is to help associations find insurance protection for all of their potential exposures. Like a snowflake, no two associations are alike.

What is it

This type of policy, carried by the condominium or co-op association, provides property coverage for the building exterior and sometimes the interior.  It also provides liability coverage for accidents and injuries that may occur in the condominium common areas.

why do i need it

The condominium unit owner policies do not provide property coverage for the building coverage or liability coverage outside of the individual unit.  Also, the mortgagee for each unit requires coverage for the building to protect their financial interest in your condominium unit.

Who needs it

All condominium and co-op associations need to protect the interests of both the association and the unit owners by providing both property and liability coverage for the building.

Click here to jump to Condo Association – Co-op Master Insurance Policy FAQ's

COVERAGE DETAILS

PROPERTY INSURANCE
Commercial Property Coverages

Property Insurance provides coverage for loss or damage to real property (land and buildings) or personal property (everything else) at the described premises.  A deductible will usually apply to each loss.

Buildings and Business Personal Property
Building coverage includes the actual building and structures, completed additions, outdoor fixtures, permanently installed fixtures, machinery and equipment.  Materials used to maintain and service the insured premises are also covered.  Business Personal Property coverage includes property owned by the insured that is used in the insured’s business, including furniture and fixtures, inventory and stock, property of others in your care, custody or control and other similar items that are not specifically excluded.

Employee Dishonesty Coverage
Employee dishonesty coverage protects an employer from financial (money and securities) or other property loss due to the fraudulent activities of one or more employees.

Inland Marine Insurance
Inland marine insurance provides coverage for property in transit as well as property of others left in your care custody or control, employees property on premises, contractors equipment and other unusual classes of property that are not generally found at a fixed location

GENERAL LIABILTY
Commercial General Liability Coverages
General Liability insurance provides coverage for bodily injury or property damage for which the insured is legally responsible due to negligence or as required by contract. The policy also provides coverage for liability arising from personal injury and advertising injury, medical expense, accidents occurring on the premises or away from the premises and products or completed operations. In addition to these limits, the policy pays defense costs

Medical Payments
Pays medical expenses resulting from bodily injury caused by an accident on the premise owned or rented by the insured or when caused by the insured’s operations.  Payment is made without regard to insured’s liability.

Fire Damage Limit
Provides coverage for fire damage to rented premises caused by the insured’s negligence.

Commercial Umbrella
An Umbrella/Excess Liability Policy provides an additional layer of protection over the limits of your primary, underlying policies (general liability, automobile liability and sometimes even employers liability or professional liability).  This provides protection against catastrophic liability claims.  Umbrella limits are typically available in $1,000,000 increments and can exceed up to $100,000,000.  Most policies pay the ultimate net loss (total amount in excess of the underlying, primary limit) for which the insured is legally obligated to pay subject to the self-insured retention (amount the insured must pay before the umbrella policy will respond), similar to a deductible.

A typical commercial umbrella liability policy offers features such as worldwide coverage; personal injury coverage; blanket contractual liability protection (for both written and oral agreements); care, custody, and control coverage; non-owned aircraft liability; watercraft liability; advertisers liability; liquor law liability; excess liability; and an extension of protection to additional insureds.

Umbrella liability insurance indemnifies the insured for loss in excess of the total applicable limits of liability stated in the schedule of underlying primary insurance policies.  The umbrella liability policy is typically a “following form,” meaning that it tracks with the provisions of the underlying insurance.  For losses that are not covered by underlying insurance, the umbrella policy generally does not apply.

With respect to any occurrence not covered by underlying insurance, or damage that is not covered by underlying insurance but that results from an occurrence covered by underlying insurance, the umbrella policy indemnifies the insured for its ultimate net loss.  The loss must exceed the insured’s self-insured retention limit ($10,000 or $25,000, for example), and must involve damages that the insured is legally obligated to pay by reason of liability imposed by law or assumed by the insured under contract.  Further, the damage must involve personal injury, property damage, or advertising injury (all as defined in the Definitions section of the policy) caused by an eligible occurrence.

When a loss that is eligible for umbrella coverage is either not covered or only partially covered by underlying insurance (including incidents where no other insurance exists), the umbrella insurer has the right and duty to defend any suit against the insured.  It is also permitted to investigate any loss and settle any claim or suit as it chooses.  In case an insurer is prevented from defending an insured, the insurer will reimburse any defense costs and expenses.  However, the expenses must be incurred with the insurer’s written consent.  This last provision allows the insurer to exercise some control over its loss exposures.

Besides the named insured, other parties that gain insured status under an umbrella liability policy are any person or organization that a named insured agrees to protect under a written contract.  The policy also protects an insured business’ executive officers, regular employees, directors and stockholders, at least for losses occurring while these individuals are acting within the scope of their duties.  Note that protection for additional insureds does not apply when a loss involves motorized vehicles, watercraft or aircraft.

Like many other policies, a commercial umbrella policy defines a number of terms to clearly express how coverage applies.  Some defined terms are advertising injury; completed operations; hired aircraft, hired automobile, and hired watercraft; immediate underlying insurance; named insured’s products; non-owned aircraft, automobile, and watercraft; occurrence and personal injury.

Maintain Underlying Insurance
The umbrella liability policy has a critical requirement.  It holds the insured accountable for maintaining the policies listed in the schedule of underlying insurance.  They must be kept in force, without alteration of terms and conditions, during the term of the umbrella liability policy.  The one notable exception is for the reduction or exhaustion of any underlying aggregate liability limits that is caused by response to an eligible loss.

Directors/Officers Liability
Directors & Officers Insurance protects your Company and the directors of your company against claims from stockholders, employees and clients. Since a director can be held personally responsible for acts of the company, most directors and officers will demand to be protected rather than put their personal assets at stake. In addition, Investors and members of your board of directors will not be willing to risk their personal assets to serve as a corporate director or officer, no matter how heartfelt their belief in your company. Finally, employment practices suits constitute the single largest area of claim activity under D&O policies. More than 50% of D&O claims are employment practices related.

COVERAGE ENHANCEMENTS – ENDORSEMENTS AVAILABLE
Equipment Breakdown - Boiler and Machinery Insurance
This optional coverage extends farther than protecting just a boiler.  You may need this important coverage, which is often excluded from a regular commercial property policy, to cover all of your electronics systems, including telephone systems and computers.  This insurance provides coverage for direct damage caused by the sudden and accidental events resulting in damage to property, expediting expenses (extra costs incurred to expedite recovery after a loss), and business interruption.

Business Income and Extra Expense
Business Income coverage provides protection for a business at the time of claim. The coverage provides the business with the lost income during the interruption of the business being able to conduct the normal operation of its work (such as a fire that damages part of the building). During the time the business is unable to operate at 100% and may have loss of business income due to this occurrence This coverage helps business owner recoup some of that lost income.

In addition to this coverage most times it is paired with Extra Expense coverage that offers additional protection to continue your normal operations. The coverage extends to compensate you for certain unforeseen expenses not directly caused by the damage. For example, the cost of moving equipment that wasn’t damaged in the event or additional commercial space to rent temporarily until your regular location is repaired.

 

Law and Ordinance
Provides protection when a substantial of a building is destroyed and local ordinances require that the undamaged portion be demolished and rebuilt to meet current building codes.  Coverages may include cost of demolition, debris removal and increased cost of construction in accordance to code.  Also included is expenses related to complying with the Americans with Disabilities Act.

Water Back up of Sewer and Drains
Water backup coverage is an optional add-on to your commercial insurance policy. This coverage pays for water damage resulting from a backed-up drain or sump pump.

Blanket Insurance
Blanket Insurance provides blanket coverage for multiple properties with a single agreed limit for all properties that are scheduled locations

Flood and Earthquake
Flood and earthquake coverage are customarily excluded from most standard commercial insurance policies. However, this coverage is available as a buy back coverage and is priced according to limits requested.

Hired and Non-owned Auto Liability
Unless company employees use public transportation for all business needs, hired and non-owned insurance is an important coverage that should be part of your business auto insurance program.  Ordinarily this coverage only provides liability protection for rental situations and errands, but sometimes physical damage insurance is available.  A company does not have to own any vehicles to obtain hired and non-owned coverage.  In this case, coverage can be added to the general liability policy.  Examples of situations involving the use of non-owned vehicles for business purposes include asking an employee to pick up breakfast for a meeting, sending a sales representative to visit a client, or having a friend mail a package on her way to the post office.

 

FAQs

How much will the condo master policy cost?

Some of the factors used to determine the cost are:

  • What coverages are required by the by-laws of the association
  • Amount of coverage on the building and the deductible
  • Type of building construction, whether sprinklered, & updates

 

What does condo association insurance cover?

Master policies vary and can be extremely comprehensive including many different added coverages- for example: coverage for the interior of the units, directors and officer’s liability, employee dishonesty, water back up etc. Some are very basic, and the deductible can vary from policy to policy. Also note that condo by-laws sometimes spell out how the master policy should respond during a claim as well.

What is “Walls In” coverage?

This optional coverage is for the interior surfaces of the units.  Added by endorsement to the master policy, it states that regardless of the requirements of the by-laws, the master policy will provide property coverage for the individual units as well as the condominium common areas.

 

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