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Where Building and Homeowner Coverage Intersect What's Covered?

Common sense notwithstanding, a lot of co-op and condo owners don’t have the adequate liability and property insurance they should have. Too often they assume that their building association has insurance coverage that will automatically cover their personal possessions in case of an accident or negligence.

Generally speaking, they’re mistaken. The insurance that the building has for covering catastrophic damage to common areas—such as structural damage caused by fire, wind, and flooding—as well as “slip-and-fall” negligence claims doesn’t necessarily extend all the way to a resident’s personal property. In most cases, your building’s policy is not going to cover your grandma’s heirloom table or the original Annie Leibovitz limited edition photograph it’s propping up.

Knowing the Score

If you’re a board member and feeling smug right now because you’re absolutely certain that every unit owner in your building has more than enough insurance coverage to protect both themselves and your community in the event of a mishap or disaster, you may be in for a rude awakening. The fact of the matter is that while prospective buyers may be required to show proof of insurance in good standing at the time of closing, monitoring whether or not that coverage is up-to-date and adequate is another matter entirely.

“Sometimes, what we have found is that the unit owners think the association’s policy covers everything, and that is a false impression,” says Greg Blair, a partner with Nottingham Insurance in Hamilton Square. “A lot of times they just think the certificate they get at closing, which shows property coverage, covers everything. When in fact… it only covers the common areas of the association, the common property, such as clubhouses.”

Blair continues, touching upon the difficulty of boards keeping track of exactly which unit owners have what coverage, saying,

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