Condo Media - January 2013 - (Page 30)

INSURANCE by Mark Rosen, Esq. ‘Don’t’ Fall into the Gap Insurance Coverage Missteps ccording to my research, in 1981 the GAP had an advertising slogan and jingle for customers to “fall into the GAP.” For condominiums, both the organization of unit owners and the unit owners themselves, that is precisely the opposite of what you want to happen with respect to insurance, that is, you don't want to fall into the gap. nization or manager in the event of cancellation or substantial modification. In addition, the manager or managing agent must maintain, at its sole A Insurance and Condominium Documents In virtually all governing documents of condominiums there is a provision whereby the organization of unit owners is required to obtain and maintain to the extent available, a master policy of insurance covering all of the common area and elements. In addition to the master policy that covers all of the common area and elements, condominiums may also be required under their bylaws to obtain and maintain coverage that might arise as a consequence of personal injury or non-property losses that may be sustained in the common areas of the condominium. This coverage is issued on what is denoted as a comprehensive general liability or CGL policy. Other insurance policies the organization of unit owners typically obtain is what is commonly termed directors’ and officers’ (D&O) coverage, which generally insures the trustees/managers for breaches of fiduciary duty or mismanagement of the condominium. Other policies the organization of unit owners should consider are policies that insure the mechanical apparatus of a condominium from failure, such as a boiler or septic system, flood insurance and earthquake insurance, which coverages may not be included in the condominium’s master or CGL policies. In summary, a condominium needs to carry several kinds of insurance. The specific coverages of each of these policies will be dictated by the provisions of the condominium’s bylaws and Statute Requirements In Massachusetts, the starting point for the analysis of insurance, as with most condominium issues, is M.G.L. c. 183A. Interestingly, the only requirement of insurance mandated by 183A is found in §10(h) whereby the organization of unit owners in condominiums of more than 10 units must secure and maintain at its own cost and expense blanket fidelity insurance coverage insuring against the dishonest acts of any person, trustee, manager, managing agent or employee or the organization of unit owners who is responsible for handling organizational funds in an amount equal to at least onefourth of the annual assessments, excluding special assessments. Such fidelity insurance policy per its definition of employee must specifically include the manager or managing agent or provide for same by an endorsement to the fidelity policy. Such fidelity insurance must name the organization of unit owners as the insured and include a provision requiring 10 days written notice to the orga- cost and expense its own fidelity insurance with substantially the same form of coverage. However, §10(b)(3) provides that the organization of unit owners shall have among its powers the ability to obtain insurance on the common areas and facilities. This insurance shall be without prejudice to the right of each unit owner to ensure his/her own unit for his/her own benefit. 30 CONDO MEDIA • JANUARY 2013

Table of Contents for the Digital Edition of Condo Media - January 2013

Condo Media - January 2013
From the CED’s Desk
President’s Message
CAI News
CAI Regional News
Asked & Answered
Homeowner’s Corner
Vendor Spotlight
Industry Perspective
Self-Managed Association Boards
Classified Service Directory
Advertisers Index

Condo Media - January 2013