Topic:
PROPERTY INSURANCE; CONDOMINIUMS;
Location:
CONDOMINIUMS - CONVERSION; INSURANCE;

OLR Research Report


January 29, 2004

 

2004-R-0091

PROPERTY INSURANCE FOR CONDOMINIUMS

 

By: Janet Brierton, Associate Legislative Attorney

You asked if Connecticut law requires a condominium association's insurance policy to cover water damage to a unit owner's property inside a condominium. You also asked if it is mandatory for unit owners to maintain insurance on their property.

This office is not authorized to issue legal opinions and this memorandum should not be considered as such.

SUMMARY

Connecticut law requires a condominium association to maintain property and liability insurance. The property insurance requirement, however, is for damage to the building and common elements only, not to unit owners' personal property.

Connecticut law does not specifically require a unit owner to obtain property insurance. However, the law preserves a unit owner's right to insure his unit for his own benefit. Mortgage companies typically require property insurance as a condition of sale, so most unit owners will likely have insurance on their personal property. State law does require that if the condominium association's policy and other insurance in the name of the unit owner cover the same risk, the association's policy provides primary coverage (i.e., pays first).

State law also requires the condominium association to maintain, repair, and replace all common elements, and each unit owner to maintain, repair, or replace his unit, unless the condominium declaration provides otherwise. As a result, the condominium association's documents (declarations, bylaws, and insurance policy) must be consulted to determine what constitutes a unit, what constitutes a common element, who is responsible for making repairs, and what insurance coverage exists.

CONDOMINIUM INSURANCE

Connecticut law requires condominium associations to maintain property insurance to protect against loss to the common elements of the property and liability insurance, including medical payments, to protect against death, bodily injury, and property damage arising out of or in connection with the use, ownership, or maintenance of the common elements of the property (CGS 47-255(a)). The law does not require the condominium association's property insurance to provide coverage for unit owners' personal property.

In the case of a building that contains units having horizontal boundaries (i.e., units upstairs and downstairs), the condominium association's property insurance must also include coverage for the units (CGS 47-255(b)). However, according to Matthew Perlstein, a condominium law expert, this coverage extends to the building and to the common elements only and is meant to replace the building as it was originally built. It does not include coverage for any improvements made by the unit owners or unit owners' personal belongings.

The condominium association's insurance policy must designate each unit owner as an insured with respect to liability arising out of his interest in the common elements of the property and provide that the insurer waive its right to subrogate under the policy against any unit owner or member of his household (CGS 47-255(d)(1) and (2)).

A unit owner is not prevented from insuring his unit for his own benefit (CGS 47-255(f)). However, the law does not specifically require a unit owner to obtain insurance. Mortgage companies typically require property insurance as a condition of sale, so most unit owners will likely have insurance on their personal property. State law does require that if,

at the time of loss under the condominium association's policy, there is other insurance in the name of the unit owner covering the same risk, the association's policy provides primary coverage (i.e., pays first) (CGS 47-255(d)(4)). It is possible for a condominium association to require unit owners to obtain property insurance, but such a requirement would have to be included in the association's declarations.

Lastly, Connecticut law requires a condominium association to maintain, repair, and replace all common elements, and each unit owner to maintain, repair, or replace his unit, unless the condominium declaration provides otherwise (CGS 47-249(a)).

Therefore, because of the flexibility possible in insurance coverage and association rules, the condominium association's documents (declarations, bylaws, and insurance policy) must be consulted to determine what constitutes a unit, what constitutes a common element, who is responsible for making repairs, and what insurance coverage exists.

It must be noted that the above discussion relates to condominiums created since January 1, 1984 or to condominiums created prior to that date that choose to come under the Common Interest Ownership Act (CIOA). The requirements for condominium associations created prior to January 1, 1984 and not under CIOA are substantially the same with respect to insurance (CGS 47-83) and repairs (CGS 47-84), with one exception. The horizontal boundary requirement is absent from the requirements for condominium associations created prior to January 1, 1984.

The Connecticut Department of Insurance advised us that it would review the condominium claim in question if they receive the condominium association's declarations, bylaws, and insurance contracts.

JB:ts