It's no secret that the insurance industry is big business; there are approximately 2,000 companies competing for market share, which means that co-op, condo, and HOA boards have their work cut out for them when it comes to understanding the subtle nuances embedded in their insurance policies. According to the pros, many (if not most) boards are less than well-informed about their policies and risk exposure.
“Ninety percent of boards really don’t have a firm understanding of insurance policies; it’s mind-boggling,,” says Ron Sirotzki of Hollinger Services Inc., an insurer in Elk Grove Village, IL. “Let’s face it; reading policy is boring—who really wants to do that? That's not to say that no board members ever [read their association's policy], but in my experience, for many it boils down more to reputation and whom they trust.”
Knowing the Basics
By their nature, general umbrella policies of the type most condos, co-ops, and HOAs carry cover a wide range of possible problems—and while they may cover seasonal issues like hail damage or ice, “Policies for condominium or co-ops do not change based on the seasons,” says Andrew P. Dolliff of CIC Lakeview Insurance Agency, Ltd. in Chicago. “Coverage is generally regardless of season. There are specific issues that are more seasonal such as ice dams, sewer backup and roof damage resulting from the weight of ice or water.”
While the majority of condo associations have a master insurance policy in place to protect the entire structure including all residential units within it, individual homeowners policies are still required to provide unit owners with personal property and personal liability coverage. Similarly, a co-op’s insurance policy will normally cover losses to the co-op's commonly owned property and liability for the corporation. These policies do not insure losses to the interior of respective units, personal property, or liability if someone is injured inside a unit.
Tackling insurance related issues requires due diligence. Studying requirements and guidelines is a good starting point. “The Illinois Condominium Property Act provides some minimum coverage requirements that every association needs to include,” says Dolliff. “A relationship with an agent who specializes in condominium and co-op properties can help develop a comprehensive insurance program for your properties.”