This page contains a Flash digital edition of a book.
Condominium Complexes


Taking control of a condominium complex through foreclosure poses particular insurance challenges. The devil is in the details of the homeowners’ association documents.


“Until you are able to review the documents that underlie these associations, you won’t fully understand the risk at hand and how to place the appropriate insurance.”


Patricia Dennis, Zions Bancorp


The covenants, conditions and restrictions (CC&R) documents for the homeowners association will determine the complexity of the insurance purchase. The simplest situation is raw land, which requires liability based on acreage. If the project is partially completed, the developer maintains insurance for the construction and the CC&R documents state exactly what coverage is required for the homeowners’ association, which does not dissolve when the bank forecloses on the property. This will include coverage for the association’s liability and for the common area property. Directors and officers coverage may be required to protect the individuals who sit on the homeowners’ association board, which often includes bank employees. Obtaining a D&O policy can be difficult with lack of a claims history or the presence of litigation. If coverage can’t be obtained, the bank’s D&O policy may extend to bank employees on the board. It’s important to scrutinize the general liability form because it may not cover the property manager unless specifically added as an additional insured. The situation becomes more complex for freestanding office condominiums because often the individual borrower is responsible for insuring the entire structure.


Copyright © 2012 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20