September 4, 2009

This week's tip comes from a new article, HOA and Condo Insurance: 5 Tips to Double-Check Your Association's Insurance Coverage.

"Read carefully the [insurance] requirements of your own governing documents," advises Robert Galvin, a partner at Davis, Malm & D'Agostine PC in Boston who specializes in representing condos and co-ops. "Occasionally, I find an association that didn't follow the requirements of its own documents. For example, one high-rise condo in a city near Boston didn't even have a condo association policy. It had an apartment building policy."

That said, it may be smart to consider easing your association's insurance requirements. "Some associations have coverage that's more expansive than the law requires, and that's based on their governing documents," explains Matthew A. Drewes, a partner at Thomsen & Nybeck PA in Edina, Minn., who represents associations. "You might want to amend your documents to provide for less inclusive coverage.

"For example, some have an all-in policy, which covers the cost to replace everything inside a building. That could be converted to bare-walls coverage, which covers only the cost of replacing the structure to the bare walls. If you're being cost-conscious in terms of premiums, that's a way you could save money. In addition, if you require owners to carry HO6 policies, which are policies specifically geared for condo owners, it makes sense to reduce the association's coverage to bare walls."

To get all the condo and HOA insurance checkup tips, see our new article.

Best regards,
Matt Humphrey
President