Insurance Responsibilities: What Is Required?

Many of our clients have asked our office about insurance responsibilities of the Association and individual owners.  When a casualty occurs, the first step taken may be to check whether such act is covered.  It is important to understand the requirements of your Association to make sure that the property is properly insured before a casualty occurs. 

Most governing documents explain insurance requirements; however, if those provisions are absent or lacking, we can rely on the Ohio Revised Code.

 Association’s Responsibilities Pursuant to R.C. 5311.16, a condominium Association must obtain the following insurance coverage as a common expense, unless otherwise provided for in the governing documents:

1.  Fire and extended coverage insurance on all buildings and structures of the condominium property in an amount not less than eighty percent (80%) of the fair market value.  

This coverage protects against loss or damage by fire; lightning; perils of extended coverage (which include windstorm, hail, explosion, civil commotion, riot, aircraft damage, vehicle damage, smoke damage); vandalism; and malicious mischief (which includes the intentional destruction of property).

2.  Liability for personal injury or property damage arising from or relating to the common elements.  Coverage shall be obtained for the benefit of all unit owners.  This coverage protects against liability for bodily injury, disease, illness, or death, and for destruction of property, occurring on the Condominium Property.

Generally, declarations of condominium ownership may also require worker’s compensation insurance to the extent necessary if the Association has employees. 

 A condominium Association may obtain the following insurance coverage as a common expense:

1.   Directors and Officers coverage should be purchased, especially if there is an indemnification provision in your documents requiring the Association to be responsible for reasonable expenses (including attorney fees, judgments, fines, penalties, etc.) incurred by a current or former Board member while he or she was acting in his or her official capacity as a Board Member.

 2. Fidelity bonds cover the Association for losses incurred as a result of fraudulent acts by individuals who have the authority to handle the Association’s finances, like a managing agent.  If an Association has someone other than a director or officer handling its funds, a fidelity bond can be obtained.

3. Directors and Officers liability insurance.

Owners’ Responsibilities

Whether an owner is required to obtain any other insurance is determined by your Association’s governing documents.  The Ohio Revised Code does not require owners to obtain any particular insurance.

As always, each Association may have different needs regarding insurance based on the governing documents. 

If your Association has questions regarding insurance, please contact us.

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