Guide for Insuring Your Condominium From Natural Disasters

Condo owners associations (COAs) and unit owners wish to enjoy their properties without interruptions, but sometimes uncontrollable events happen. Natural disasters such as floods, earthquakes, and hurricanes often result in significant financial losses, especially when the property is uninsured or underinsured. Condo associations and unit owners need to understand their options and what actions to take when properties are damaged.

Does Insurance Cover Natural Disasters?

Your condominium insurance may protect you against natural disasters, depending on the type of coverage. But there are a few things you must know. First, natural disaster home insurance is not a type of coverage you can purchase. You may purchase coverage, such as condominium insurance, that protects your property against certain natural disasters, among other things. You may also purchase additional coverage specially designed to protect your property against specific natural disasters.

Second, the condominium association’s master policy is generally limited to the building and specific areas on the property called the common areas. The common areas comprise the shared spaces on the property, such as swimming pools, elevators, hallways, playgrounds, garages, storage areas, and lobbies. So, even if the COA has a policy that protects the building against natural disasters, that coverage may not extend to the individual condominium units. We’ll discuss the exceptions later.

To protect their individual condo unit and the properties within against natural disasters, each owner needs a personal condo insurance policy, also called HO-6 insurance. HO-6 insurance is one of the many home insurance policy forms used across the industry. Even so, the policy may exclude certain natural disasters, such as flooding, especially in disaster-prone areas. For a more comprehensive coverage, you may consider purchasing additional coverage specially designed for the kind of perils you wish to protect your property against.

Dividing insurance coverage between condo associations and condo owners can be tricky when the damage affects several areas of the building. Also, in some cases, an incident may be covered by multiple policies at the same time. In such situations, it would be best to consult an experienced condo attorney to assess the incident and provide tailored advice. It’s also advisable to review the condominium association’s master policy to know the extent of coverage available.

Insurance Options for Natural Disasters

Various insurance options are available for natural disasters, including the following:

1. Condo Owner’s Insurance

The average condo insurance policy protects the property against ordinary damages. It provides financial coverage against loss of personal property such as furniture and other belongings against theft and damages by named perils. The named perils may include disasters such as hail and wind but typically exclude earthquakes and floods from external sources like heavy rainfall and storm surges, especially when the area is prone to such events.

For example, if a heavy hailstorm bursts your pipes, the HO-6 coverage may pay for the repairs or reimburse you for the losses. Condo insurance may also cover natural disasters like tornadoes, but it can be more complicated for those living in vulnerable areas. It’s crucial to ensure that you are not underinsured for the covered perils. Additionally, if you have a mortgage, your lender will likely require you to have HO-6 insurance.

2. Flood Insurance

Most insurance policies covering condominiums exclude flood insurance, so you may have to purchase it separately from a private insurer or through the National Flood Insurance Program (NFIP). The federal government administers the NFIP, which is available to homeowners, renters, and business owners. There are four methods for insuring condos under the NFIP. These are:

• Residential condominium association coverage: COAs may purchase insurance coverage for the building and its contents under the Residential Condominium Building Association Policy (RCBAP). According to the Federal Emergency Management Agency (FEMA), the RCBAP is mandatory for all properties owned by a condo association that have residential units where 75% of the square footage is residential. The RCBAP covers residential condos in a regular program community. The named insured must be the condo association, or the agent must provide legal documentation for verification, such as a copy of the COA bylaws or a signed statement from an association representative confirming the property is under condominium ownership.
• Residential condominium unit owner’s coverage: The unit owner may purchase coverage to protect their properties against flood damage. It applies to the private areas in the condo and damages to the common elements within the unit owner’s responsibility.
• Non-residential condominium association coverage: The coverage applies to commercial condos and is reserved for the associations. It protects the building and its contents against flood damage.
• Non-residential unit owner’s coverage: An owner of a residential or non-residential unit within a non-residential condo building may purchase coverage to protect the contents of that unit. The building itself must be insured in the name of the association.

3. Earthquake Insurance

Additional coverage can protect the building and its contents in an earthquake. Condo associations may purchase coverage to protect the structure, common areas, and some fixtures in those spaces. Unit owners may also purchase coverage to protect the unit’s private areas and their belongings.

4. Region-Specific Insurance

Knowing which disasters could affect your area and insuring your condo property against them is essential. For example, if you live in a city with higher chances of experiencing mudflows, mudslides, or landslides, purchase coverage that applies to those disasters. You can view your regional information on the FEMA website.

Are There COA Requirements for Insurance?

There are no specific requirements to insure your condo against natural disasters in Massachusetts, but the COA bylaws may provide otherwise. For example, the condo rules may require that the association purchases a specific kind of coverage and demand unit owners to pay certain fees. The condo rules are legally binding and enforceable as long as the terms comply with the law.

Actions to Take if Your Property Is Damaged

Here are three crucial things to do when your property is damaged:

1. Find the Cause and Location of Damage

Knowing the cause of damage helps you know who is responsible for the repair or replacement. Generally, no one is held liable if an “act of God” or natural disaster causes damage. However, if a person’s wrongful act or negligence is attributable to the damage, that person may be liable for the loss. For example, if a tree falls and damages your window during a storm, but you find out that someone responsible failed to care for the tree properly, that person may be required to fix or replace the window.

The location of the damage can also help you determine who is responsible. Generally, condo associations are liable for damages in the common area, whereas unit owners are responsible for those in their condo units. The same rule applies even if a natural disaster causes the damage unless the condo bylaws provide otherwise.

2. Examine the Master Policy

Condo unit owners may check the master policy to see whether the coverage extends to any part of their unit. Where the condo association has a bare wall coverage, the structure of the condo building, including insulation, wiring, and plumbing within the walls, may be covered. However, where the condo association has an all-in or inclusive coverage, original fixtures in the individual condo unit, such as appliances and installations, may also be covered. Reviewing the condo rules to know the extent of protection is essential.

3. Contact a Condo Attorney

Natural disaster insurance claims can be complex, so it’s best to hire an experienced attorney when you have a challenge. Lawyers understand the technicalities of condo insurance and can help you determine whether you have a valid claim. Most importantly, act promptly to avoid unnecessary inconveniences and costs.

Contact Calabrese Law Associates for Condo Legal Advice

Calabrese Law Associates provides practical legal solutions to condo associations and unit owners in the Greater Boston Area. Our attorneys have years of experience solving complex condo insurance problems. We dedicate resources to help clients find the answers to their legal needs in a transparent, honest, and helpful manner. If you have any challenges or want to learn more about our services, contact us now!

This publication and its contents are not to be construed as legal advice nor a recommendation to you as to how to proceed. Please consult with a local licensed attorney directly before taking any action that could have legal consequences. This publication and its content do not create an attorney-client relationship and are being provided for general informational purposes only.

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