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You as a condo association member understand that general liability – the foundation of your insurance program – covers only certain areas within and around the property buildings and grounds. What you may not understand is how your residents view your coverage. While it may seem a no-brainer to you that your insurance policy isn’t going to cover their personal claims, residents may not know this. Time for a little Insurance 101 for your residents.

In general, the condo or apartment association’s general liability policy will cover the following:

• All common areas of the condo association property
• The structure of the units, including roofs, outside walls, the buildings themselves (note: this does not include individual units, but rather the structure they are housed in) 
• The property’s common areas, such as the pool, tennis courts, exercise facilities, offices 
• Liability for injuries to people that occur in common areas

What your residents need to understand is where your policy coverage stops and where theirs needs to pick up. Most condo association insurance policies will exclude the interior of any unit, including fixtures, flooring, appliances, etc. It does not cover for injuries sustained by others inside the owner’s unit.

The master policy for your condo association could indeed pick up some of these otherwise owner-specific exposures depending on which policy you have. Two master package policies include:

• Bare Walls In: covers the building structure from roof to walls. The unit owners would be responsible for insuring the contents within their units. 
• All In: covers the building structure and interior elements of individual units, including any owner additions, fixtures, etc.

It’s best to go over your policy with a broker who specializes in condo association insurance coverage to determine which policy you have and how much your residents are liable for.

Armed with the specifics, you can then inform your residents of the limits of your condo association insurance coverage. While it’s not advisable for you to become insurance advisors, it’s always good practice to help residents understand what the association will be responsible for and where that responsibility ends.

I mean we’ve all heard stories about the waiters and waitresses at our favorite restaurant swiping our credit card numbers on a little theft gizmo before running the charge through for the meal.  I’ve actually been a victim of something similar.  Although I love the restaurant dearly (it serves the best Mexican food) I only pay with cash. period. 

Every month large sums of money moves through your books.  Rents come in as income, and then there are expenses – utilities, maintenance, staff, supplies, insurance, taxes, advertising, legal fees, tenant damage, etc.  Do you have safeguards in place to deter sticky fingers?

Do you have one person write checks and another person sign them?  Who reconciles the bank statement each month?  Direct theft is one form of employee dishonesty. 

Another form would be when an employee uses tenant information – credit card numbers, social security numbers, birthdates, etc. to make fraudulent purchases for personal gain.  This form of theft is more difficult to identify.  And yet, you could be named as a party in the lawsuit.

All forms of theft are damaging – not only to the Apartment owner but to the reputation of the property and the ability to keep maximum occupancy. So, what’s the remedy?  Aside from the obvious of doing everything yourself, which assumes you’re an honest person, is to have certain policies in place.

1.  Bond your employees.   Fidelity bonds protect you (the policyholder) for losses incurred as a result of theft or dishonesty by the bonded employee.

2.  If your business is a corporation, LLC, etc. you should have Directors and Officers (D&O) liability insurance in place.  This coverage will protect the organization from legal/litigation costs resulting from mistakes (yes, that’s a broad term) for which they are liable.

3.  Is it a standard part of your application process for prospective tenants to provide proof of tenant/renter’s insurance?  What about the maintenance person or exterminator who likes bright shiny objects?  Proof of tenant/renter’s insurance should be standard for all approved applications.

When you protect your business, you’re protecting others from losses that can and will occur.  Legal fees and shattered reputations can ruin a business.  Be proactive and have policies (employer and insurance) in place to deter dishonesty and prevent holes in your office.