Unlike individual apartment owners’ insurance coverage, most co-ops, condos, and HOAs’ insurance policies are pretty standard—they include homeowners’ insurance, liability, and umbrella coverage. Usually, a building’s common areas—such as the hallways, roofs, basements and so on—are insured for liability and physical damage, and occasionally, the association’s insurance policy also covers the standard fixtures in each individual unit.
Just because most HOAs have similar policies covering the basics doesn’t mean that’s all there is to be had in the way of coverage, however. There’s directors and officers, or “D&O” insurance, which protects board members if they are sued in connection with their actions or decisions. And nowadays, more and more boards and associations—not just lenders—require that the shareholders or condo owners carry their own homeowners’ insurance to protect their individual units.
As a result of the subprime crisis, the Federal National Mortgage Association, Fannie Mae, instituted a series of reforms earlier this year intended to prevent further defaults on housing loans. One of these requirements involves a new insurance mandate that directly impacts a condominium buyer’s ability to secure loans. As of March 1, 2009, all condominiums (both new and existing) with 20 or more units must have what’s called fidelity insurance—basically, insurance against thieves—for a loan to be considered “conforming” by Fannie Mae. Previously, only new HOAs were required to have the coverage.
Other types of insurance for co-op and condo units can include coverage for sewer backups, natural disasters, employee thefts and even changes in municipal rules and regulations. Those are just a few of the more specialized types of insurance available that non-insurance professionals—including board members and managers—may not be familiar with. This article will take a look at some of these types of insurance.
Time to Go Green
To begin with, in today’s world of both residential and commercial buildings, “green” is the new byword (in the past, such buildings were merely called “energy-efficient.”). Now, insurance carriers are riding the trend and offering several types of “green” coverage to multifamily buildings.