Obtaining and maximizing insurance for condominium associations has many challenges, including limited insurance markets, allocating insurance responsibilities between unit owners and the association, and implementing rules to give the association the best insurance outcomes for rates, coverage, and claims.

A condo association’s insurance options will be directly affected by the percentage of total units that are rented and the length of stay allowed for renters. Knowing your exposure is the first step in managing risk.  Associations should require owners to notify the association of their rental frequency and insist that owners’ long-term tenants provide a copy of their insurance policy.  If a renter causes a loss that results in the use of the associations’ master insurance, it is important to have an avenue for the association’s insurer to try and recoup its loss from the tenant who caused the damage.  Without this recourse, the association suffers the loss and its future insurability is negatively affected.

An association with short-term or transient rentals (weekly or daily) is harder to insure, and unit owners in this situation cannot rely on a standard HO6 unit owner policy.  Rather, unit owners must present to the association a copy of a “commercial” or “dwelling” fire policy showing that they have the proper coverage for their investment/commercial activity.  Requiring a copy and review of this coverage is imperative as backup coverage from rental companies may be insufficient and cause the association’s insurance to suffer.

Speak with your insurance representative or condominium attorney for further guidance and tips.

Melcher & Prescott Insurance and Wescott Law, respectively, have provided insurance and legal advice to New Hampshire condominium associations for decades. Contact Randy Eifert, Executive VP of Melcher & Prescott Insurance, or Attorney Sarah Rubury, of Wescott Law, to discus how to best protect your association.