Questions On Article Law Changes

Recently, our office received several questions about whether condominium owners must carry liability insurance on their respective units. These questions generally arise when a catastrophic event occurs, such as a fire or flood. The answer depends upon several factors. First, a condominium association does not have to require owners to carry liability insurance on their own. An association is under no statutory obligation to require owners to purchase insurance coverage for their respective units beyond what the association provides. However, keep in mind that owners must look to the governing documents, as the Declaration may require each unit owner to purchase insurance at one's own expense for coverage of one's personal property, one's unit, and one's personal liability. It is important to note that unless the condominium documents provide otherwise, the association (through its board) must provide insurance coverage protecting unit owners against:        (a) tort liability for damage related to the common elements; and,        (b) fire and extended coverage on all buildings for not less than ninety (90) percent of their fair value.Second, an association may require condominium owners to carry liability insurance on their respective units so long as their governing documents specifically include a provision saying so.  Generally, condominium governing documents allow for each unit owner to obtain insurance coverage at their own expense, but do not require such coverage. If the governing documents do not require unit owners to purchase insurance, then owners may elect to purchase insurance coverage but are not required to do so. If an association determined that each unit owner must carry insurance coverage on their respective unit then an amendment to the governing documents may be necessary. Depending upon the language within the governing documents, an association may or may not require owners to carry liability insurance on their own units. Thus, associations may require owners to carry liability insurance on their own unit if the governing documents allow for such a requirement. If the governing documents do not require owners to carry coverage, then an amendment to the governing documents would be required.  Prior to a catastrophic event occurring, our office suggests a review of your association’s governing documents to ensure that the documents adequately reflect the wishes of the board and the association when it comes to insurance coverage.    Written By: Lindsey Wrubel Associate Attorney