INSURANCE

Every condominium declaration contains specific language relating to insurance. What does yours say?

State statutes vary. In Washington State, common interest communities are required by law to carry certain types of property insurance that serves as primary in the event of a loss; however, the responsibility for paying the claim deductible is often an owner responsibility.

The Damage / Loss Flow Chart below is applicable to the general responsibilities outlined in multiple condominium governing documents, but keep in mind that your specific governing documents may have their own nuances. READ: How to Avoid Insurance Gaps

MULTI-FAMILY PROPERTY INSURANCE REMINDERS

1) unit owners are almost always responsible for in-unit losses up to each association's insurance deductible

> IF something in one unit causes a loss, that unit is probably responsible for costs up to the association's insurance deductible

2) except for #1, responsible parties for losses within a deductible limit are generally in proportion to the areas damaged

3) your governing documents likely require owners to carry insurance that covers any potential deductibles and loss assessments for ANY insurance coverage held by the Association (even optional policies like earthquake)

4) While a Board often has discretion to file claim, the responsibility to restore a loss is governed by statute and your declaration

>>> Does your association monitor and enforce owners' insurance requirements? This is an often overlooked risk.

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Learn more about preventing water losses on our Plumbing Page

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H06 "WALLS-IN" COVERAGE BREAKDOWN

  • DWELLING

    • Covers permanent improvements that reside within the boundaries delineated by outside wall studs, the sub-floor and the ceiling


  • DRAIN / SEWER / WATER BACKUP

    • Damage resulting from drain / sewer / water backups is almost always excluded from standard dwelling coverage

    • Owners can add a specific rider for these types of losses


  • EARTH MOVEMENT / EARTHQUAKE

    • This is always an additional type of coverage rider that can add significant additional expense

    • If major earth movement damage occurs, units would typically be assessed a portion of of the master deductible which is often a percentage of the covered loss


  • PERSONAL PROPERTY

    • Covers items that are not permanently attached to your Unit ceiling, floor and/or walls

    • Certain types of personal property (e.g. fine art, jewelry, etc.) require a rider


  • LOSS OF USE

    • Covers expenses such as hotel rooms and moving costs during a period of time when your Unit is uninhabitable


  • LOSS ASSESSMENT

    • Covers amounts assessed to individual Units based on a loss covered by a property's master insurance policy


  • LIABILITY

    • Covers losses incurred by others resulting from your Unit

EXAMPLE DAMAGE / LOSS FLOW CHART

EXAMPLE Damage and Loss Responsibility Flow Chart.pdf
EXAMPLE Insurance Coverage Explainer

KEY TERMS & COVERAGES

Key Terms / Insurance Coverages

Business insurance is a general term that includes a gamut of different coverages.

General Liability insurance covers certain types of bodily injury and other liabilities. Many General Liability policies include $5,000 of no-fault liability coverage where the insurance carrier pays up to $5,000 without the need for litigation.

Workers' Compensation insurance often excludes volunteers. Five states (North Dakota, Ohio, Washington, West Virginia, and Wyoming) run their own programs for workers' comp coverage. Washington State Department of Labor & Industries (L&I) does not offer coverage for volunteers.

Many CICs do not realize that they possess little to no insurance coverage for bodily injuries incurred by their volunteers.

EXAMPLE Damage & Loss Language for your Declaration
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