Insurance is complicated and confusing.
Condominium corporations, condo owners and tenants are all expected to maintain insurance coverage. Each level of coverage presumes coverage by one or more additional parties. This can make it difficult to determine how much coverage is provided by any single policy, what exclusions may apply and applicable deductibles.
Lawsuits arise when one party finds they lack coverage for what they felt was a covered incident. It could be that a policy was not properly understood, had less insurance than needed or lacked sufficient insurance for the situation. One party sues and other parties are forced to defend. Lots of money gets spent on legal costs in an attempt to make another responsible for coverage. Many times insurance companies will settle for something less than anticipated legal costs.
One way to reduce this conflict is to establish an Insurance Committee and with four mandates:
- Review condominium corporation insurance coverage to ensure it is understood rather than assumed
- Recommend changes to coverage – higher or lower – to ensure consistency with what is desired
- Consider coverage changes to reduce annual premium or deductible without unreasonable risk
- Advise on coverage required by owners and tenants to ensure they are protected