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Here is a possible loss scenario:
The Finneygun Condominiums is an exclusive apartment complex that was converted to condominiums. Ten years later, a fire started in the community building and, because of high winds, it spread throughout the complex and destroyed over 90% of the units. The complex was insured for $6,000,000 on an agreed value basis. The total cost to rebuild is $9,000,000 because of significant upgrades required by various building ordinances.
The condominium had $1,500,000 in reserve and plans to assess the members for the difference. A group of unit owners file suit against the board of directors because the insurance arrangement was inadequate. |
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Condominiums are not monolithic, and neither is the insurance marketplace. Jamie Schraff, community association program manager at The Distinguished Programs Group, explains, “We place coverage for homeowner associations (HOAs), residential condominiums, office and commercial condominiums, timeshares, cooperatives, and planned unit developments of all sizes and demographics in all 50 states.”
Similarly, Gail C. Pierce, senior commercial underwriter at Roush Insurance Services, Inc., says, “We can offer property and liability coverage for almost any condominium association, regardless of the number of units, construction, or location. This includes the ones with clubhouses, lakes, security guards, playgrounds, and other additional exposures that are typical for them."
Charles Bushong, president of Coastal Insurance Underwriters, explains that they concentrate on the large southeastern market. “We do mainly residential condominium associations. We also have some facilities for commercial condominiums like offices and retail space. We do business mainly in Florida, Texas, and Alabama, all of which have huge numbers of condos.”
Some markets are particularly interested in either urban or suburban exposures. However, Robert G. Morgan at Philadelphia Insurance Companies explains, “We have a fairly broad eligibility appetite. We insure new construction, conversions, garden style, townhouses, mid-rise, and high-rise accounts. From an occupancy standpoint, we insure year-round communities, as well as rental and seasonal communities. From a location standpoint, the emphasis is more on evaluating catastrophe exposures, i.e., terrorism, hurricane, hail, earthquake, winter freeze, etc., than on the urban vs. suburban distinction.”
This broad demographic approach is similar to that espoused by George Cvengros, underwriting supervisor at Burns & Wilcox. He says, “We arrange coverage for residential and commercial condominium associations in urban and suburban locations. We can write associations as small as one unit up to several hundred units, one story or the high-rise variety. All types of construction can be considered.”
Our contacts all explained that coverage is available in both admitted and non-admitted markets. Among the carriers that write condominiums are Century Surety Company, Chartis, Companion Property & Casualty Insurance, Essex Insurance Company, Great American, Ironshore, Philadelphia Insurance, Scottsdale Insurance Company, and Tudor Insurance Company.
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