Insurance for Condominium Associations

Insurance for Condominium Associations

Randy Opotowsky

Randy Opotowsky

August 9, 2021 05:27 PM

In light of the recent condominium collapse in Surfside, Florida, condominium associations may find themselves questioning whether they are adequately insured for catastrophic casualty events and/or allegations of mismanagement of the condominium. In this article, Randy Opotowsky and Margaret Glass provide an overview of the types of insurance condominium associations are required to have under the Louisiana Condominium Act as well as the types of insurance condo associations should consider, such as coverage for large scale disasters.

Louisiana Condominium Act Provision on Insurance

In Louisiana, condominium associations are required to maintain certain types of insurance covering the condominium property, the association and the unit owners. It is important for the board of directors of the association and the association’s insurance agent to be aware of the Louisiana Condominium Act provision on insurance, La. R.S. § 9:1123.112. This statute requires the association to maintain, to the extent reasonably available, two types of insurance:

  1. Property Insurance. Associations must maintain property insurance covering both the common elements and the units, except this insurance is not required to cover “betterments and improvements,” i.e. upgrades that are of a higher quality than originally constructed, within the units. This insurance must provide casualty coverage for at least 80% of the actual cash value of the property, but associations should consider obtaining coverage for the full replacement value of the insured property.
  2. Liability Insurance. Associations must also maintain comprehensive general liability insurance which provides coverage for death, bodily injury, and property damage arising out of or in connection with the use, ownership, or maintenance of the common elements. This policy must cover the association and also the unit owners with respect to liability arising out of the unit owners’ ownership interest in the common elements or membership in the association. The statute does not require a specific amount of insurance; associations should consult their insurance agents about appropriate amounts.

The above policies are subject to various requirements set forth in the statute, including requirements that the insurance company waive subrogation against individual unit owners and that coverage cannot be voided by the acts of unit owners acting in their individual capacity. In the event of a claim under the association’s insurance policies, the association will generally work with the insurance company in the capacity as a trustee for the unit owners, who have interests in the policies as described above.

The Louisiana Condominium Act, La. R.S. § 9:1123.113, also requires associations that collect assessments for common expenses to maintain a blanket fidelity bond or equivalent insurance providing coverage in the amount of the lesser of (i) $1,000,000 or (ii) the total amount of reserve balances of the association plus one-fourth of the aggregate annual assessment of the association, but no less than $10,000. However, this requirement is considered satisfied if the association’s third-party manager carries a bond or insurance satisfying these requirements and names the association as an additional insured. Associations should further confirm that any third-party manager or management company maintains its own separate liability and errors and omissions insurance.

Other Types of Insurance Condo Associations Should Consider

In addition to the above, the association is permitted, but not required, to carry any other insurance it deems appropriate. Associations should seriously consider maintaining directors and officers liability insurance, flood insurance, workers compensation and employer liability insurance if they have employees, builder’s risk insurance in the event of any construction, personal property coverage if not included in the property policy, and an umbrella liability policy. Particularly in the case of a large scale disaster which involves potential allegations that the association failed to address existing problems, as is occurring in Surfside, adequate directors and officers liability insurance and an umbrella liability policy would be extremely important.

The condominium declaration may also require each of the individual unit owners to carry their own separate insurance policy, sometimes referred to as an HO-6, which typically covers damage to the “betterments and improvements” within the unit, as described above, and provides personal liability coverage to the unit owner in the unit owner’s individual capacity. La. R.S. § 9:1123.112 provides that this insurance is primary with respect to betterments and improvements within the unit owner’s unit, while the association’s property insurance policy is primary with respect to common elements, structural elements and components, and fixtures and improvements of the condominium units that are not classified as betterments and improvements.

If a condominium allows short-term rentals, any unit owner conducting short-term rentals should consider obtaining an endorsement to provide coverage for those activities, which are often not covered by standard homeowners or HO-6 policies and also not by association master policies.

Learn More About Legal Requirements for Condominium Association Insurance

One of the greatest responsibilities of a condominium association is selecting and maintaining insurance to respond to unexpected events. Please contact our office if you are interested in learning more about the legal requirements for condominium association insurance.

Related Articles

Maximizing Your Investment in Real Estate Development with Legal Expertise

by Best Lawyers

Best Lawyers evaluates the various types of real estate development projects and why hiring legal expertise could maximize the outcome of your investment.

Wooden house cut outs in a shopping cart with a blue backdrop

How Real Estate Transactions in the Residential Sector Work

by Best Lawyers

Discover how real estate transactions in the residential sector work with this guide. Learn about the stages, parties involved and legal requirements.

Man looking at houses on computer

House Trap

by Heidi E. Storz

Special districts are often being used as profit centers that leave residents to foot the bill. These homeowners deserve protection from unscrupulous developers who attempt to fleece them and avoid accountability.

Special Districts Changing Property Ownership

Announcing the 2022 Best Lawyers: Real Estate and Infrastructure Publication

by Best Lawyers

Featuring the top legal talent from The Best Lawyers in America, Best Lawyers: Ones to Watch in America and "Lawyer of the Year" recipients for real estate and infrastructure as well as thought leadership from some of the nation's top lawyers.

Real Estate and Infrastructure Publication

Choosing a Title Company: What a Seller Should Expect

by Roy D. Oppenheim

When it comes to choosing a title company, how much power exactly does a seller have?

Choosing the Title Company As Seller

Is New Always Better?

by Janice Zhou

The rapid rise of gentrification in major cities leaves residents wondering.

Road facing bridge at sunset

Gimme Shelter

by Janice Zhou

Being able to afford housing in Boston, and other desirable cities like it, is increasingly out of reach for too many. What can be done, legally and politically, to combat the problem?

Housing Shortage in Boston

Great Rebuild

by Best Lawyers

Néstor Méndez discusses labor peace, junk-bond repercussions, and the laudable resilience of those who call this storm-battered island home.

An Interview With Pietrantoni Méndez & Alvare

WATCH: Best Lawyers Discusses COVID-19 & Rental Agreements

by Best Lawyers

Three legal experts join the CEO of Best Lawyers to talk about a general approach to “the rental” market and what happens if tenants can’t pay rent in May.

COVID-19 Panel: Rental Agreements

Impact of Climate Change on Real Estate Law

by Best Lawyers

Dr. Christian Schede discusses rent in large cities, the effect of Airbnb, and more.

An Interview With Greenberg Traurig

Property Rights...and Wrongs

by Chad Cooper and Steven S. Kaufman

Winning a legal battle often boils down to finding and targeting the weakest part of an opponent’s case. Four recent real estate disputes in northeast Ohio are good examples.

Strategies for Real Estate Litigation

Trending Articles

A Celebration of Excellence: The Best Lawyers in Canada 2024 Awards

by Best Lawyers

As we embark on the 18th edition of The Best Lawyers in Canada™, we are excited to highlight excellence and top legal talent across the country.

Abstract image of red and white Canada flag in triangles

The Long, Short, Thick and Thin of It

by Avrohom Gefen

“Appearance discrimination” based on employees’ height and weight is the latest hot-button issue in employment law. Here’s a guide to avoid discrimination.

Woman stands in front of mirror holding suit jacket

Vanguards of Victory: Best Lawyers: Ones to Watch in Canada 2024

by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in Canada™ has been announced, and the lawyers showcased by these awards are rising to the challenge each day as advocates for clients all across the country.

Blue and black background with small squares connected by lines

Announcing the 2023 The Best Lawyers in America Honorees

by Best Lawyers

Only the top 5.3% of all practicing lawyers in the U.S. were selected by their peers for inclusion in the 29th edition of The Best Lawyers in America®.

Gold strings and dots connecting to form US map

Trailblazing Titans of the Industry: Announcing the 4th Edition Best Lawyers: Ones to Watch® in America

by Best Lawyers

Best Lawyers honor and celebrate these talented, innovative newer lawyers who are trailblazing their way to victories in courtrooms across the country.

Connected web above map of the U.S.

Pearls of Wisdom: Celebrating 30 Editions of Best Lawyers’ Rankings

by Best Lawyers

In celebration of our landmark 30th edition, Best Lawyers’ leadership explains how the world’s original and most trusted legal awards maintain their esteem, integrity and reputation for excellence among the top legal entities and their clients.

Best Lawyers logo for 30th edition release with gold glitter in background

Best Lawyers: Ones to Watch in America for 2023

by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in America™ highlights the legal talent of lawyers who have been in practice less than 10 years.

Three arrows made of lines and dots on blue background

Announcing the 2023 The Best Lawyers in Canada Honorees

by Best Lawyers

The Best Lawyers in Canada™ is entering its 17th edition for 2023. We highlight the elite lawyers awarded this year.

Red map of Canada with white lines and dots


Thomson Rogers: Toronto Personal Injury Lawyers

by Thomson Rogers

Since establishment in 1935, Toronto-based firm Thomson Rogers has consistently delivered results for their clients struggling through complex litigation.

Top of a Staircase Featuring Two Large Black Doors with Bookshelves and Chairs on Each Side

The Best Lawyers in South Africa™ 2023

by Best Lawyers

Best Lawyers proudly announces lawyers recognized in South Africa for 2023.

South African flag


How Long Does a Felony Stay On Your Record in California

by Peter Blair

A felony can remain on your record for life in California. Some felonies qualify for expungement. Learn how to remove a felony conviction from your record in California.

Hand setting bird free out of a guarded fence

What the Courts Say About Recording in the Classroom

by Christina Henagen Peer and Peter Zawadski

Students and parents are increasingly asking to use audio devices to record what's being said in the classroom. But is it legal? A recent ruling offer gives the answer to a question confusing parents and administrators alike.

Is It Legal for Students to Record Teachers?

Announcing the 2022 Best Lawyers® in the United States

by Best Lawyers

The results include an elite field of top lawyers listed in the 28th Edition of The Best Lawyers in America® and in the 2nd Edition of Best Lawyers: Ones to Watch in America for 2022.

2022 Best Lawyers Listings for United States

The Upcycle Conundrum

by Karen Kreider Gaunt

Laudable or litigious? What you need to know about potential copyright and trademark infringement when repurposing products.

Repurposed Products and Copyright Infringemen

Best Lawyers: Ones to Watch in Canada 2023

by Best Lawyers

The year 2023 marks the second edition of Best Lawyers: Ones to Watch in Canada, highlighting professionals earlier in their legal careers all across Canada.

Blue background with white stairs formed out of lines

The Best Lawyers in Australia™ 2024 Launch

by Best Lawyers

Best Lawyers is excited to announce The Best Lawyers in Australia™ for 2023, including the top lawyers and law firms from Australia.

Australian Parliament beside water at sunset