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An Insurance Primer Staying Covered

It's a fact: the survival of a condo or co-op association after an accident or injury can very well depend on its insurance coverage. Failure to obtain and maintain adequate coverage can result in financial disaster if a building suffers serious damage. By the same token, overpaying for premiums or buying insurance the association doesn't need can be wasteful.

So board members (who have to be experts on just about everything involving their association) should be aware of the different types of insurance that are available to condo and co-op associations.

It's in Your Bylaws

There are few laws regulating what insurance an association should have—one exception being workers compensation (but more on that later). Mortgage lenders will require various types of insurance, but beyond that, HOA bylaws should clearly spell out what insurance it needs to have.

According to Steve Reisler of Toms River-based Commerce Insurance Services, a subsidiary of Cherry Hill-based Commerce Bancorp, "What we do is comb through the HOA's bylaws— we'll go through the insurance section and make sure the board is in compliance with what is provided in the bylaws."

Those bylaws will also dictate what items should be covered by the association's policy versus what homeowners are responsible for in individual units.

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