Condo Insurance Coverage Questioned by Condo Manager

R.M. from New Haven County writes:

Dear Mister Condo,

I am the president of the board at my condo. We had purchased insurance almost 10 months ago when the manager informed the board that it has a title of “business owner” on the common declaration along with form of business: association. On the second page of the policy it states residential condominiums. She does not like the agent and would like to change companies. I don’t see why we should change. The coverage is good at a lot less expense than our previous policy. Is there an issue with the title? She said they may not pay the claims. I don’t agree and would appreciate your advice.

Mister Condo replies:

R.M., congratulations on volunteering to serve your association and serving as President of your Board. I salute your service. Insurance for condominium associations is highly specialized and while I appreciate your sentiment of saving money, I am a bit concerned that your manager is raising a flag and questioning the validity of the insurance and the potential liability for the association if claims were denied because the wrong declarant were listed on the policy. Fortunately, this is easy to inspect and remedy if necessary. I am not an attorney nor am I an expert on insurance. For those specialized skills you should consult with a qualified attorney who can advise you on the legality and the liability to the association with the existing policy. There are a number of agencies in Connecticut that specialize in community association insurance products. You can find a list of those professionals at the Connecticut Chapter of CAI website (caict.org). If you are already doing business with one of these agencies, you are very likely fine to continue to keep them. If you have selected to insure with a different agency who has not decided to join or take training from CAI, you would be well advised to at least speak with one of them and ask for a review of your policy to determine if you are properly protected. Generally speaking, insurance rates have gone up year after year for many years. Flood insurance rates, in particular, have spiked. Many associations have opted to purchase insurance with higher deductibles or coinsurance amounts to keep their premiums low. That is fine as long as the association understands that it may be taking on more risk and may need to bolster its Reserve or Operating Funds to cover any potential loss. This is the area where a qualified community association insurance expert can be a major ally. Nothing sours the sweetness of savings like the sourness of inadequate coverage when a claim is made. Be sure you are serving the best interest of your association by having adequate coverage in place at the best rate you can find. All the best!

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