Condo Assocation Master Policy Lapsed!!!

[insurance1822]

Hello,

Insured buy's a condo, then the association goes bankrupt and master policy lapses....the 12 unit building suffers a fire which results in a total loss to the insureds unit.

Will the insureds condo policy pay to rebuild his entire unit? (including the outside?)

 

[nyc2phi]

Insured should have his own condo policy which will cover walls in.

The master policy covers walls out aka the building it self.

This situation could get very complicated and I would suggest contacting the carrier.

 

[iiinycboi]

This is my take on it, i'm no expert and new to this.

The association shouldn't go bankrupt, because when money is needed the board collects from unit owners? And if it did go bankrupt and a policy lapsed, isnt this the D&O coverage here? (because the unit owners can hold the board liable, because of their accounting mistakes?)

The insured's condo policy will only pay for the walls in, but they will only get a check for the coverage? since there is no building to rebuild the interior?

I could be wrong, i'm just thinking outloud and i'm very interested in this topic.

 

[djs]

Bankrupt doesn't mean out of business. The condo association still exists and is liable to rebuild the structure, though they obviously don't have the money to do it.

What will (likely) happen is the association will assess the condo units to cover the cost of repairs. The unit owners will then turn the assessment into their own insurance carrier, who will pay the assesment limit of the policy, if applicable. A lot of unit owners will be paying out of their own pocket.

It will be a mess!

Ultimately, the HOA will be sued. Who knows how that will turn out, but likely, the unit owners will be paying (again) to pay out the lawsuit to themselves.....

Dan

 

[iiinycboi]

Bankrupt doesn't mean out of business. The condo association still exists and is liable to rebuild the structure, though they obviously don't have the money to do it.

What will (likely) happen is the association will assess the condo units to cover the cost of repairs. The unit owners will then turn the assessment into their own insurance carrier, who will pay the assesment limit of the policy, if applicable. A lot of unit owners will be paying out of their own pocket.

It will be a mess!

Ultimately, the HOA will be sued. Who knows how that will turn out, but likely, the unit owners will be paying (again) to pay out the lawsuit to themselves.....

Dan

Hey Dan, is my thinking some what on point with what you said?

 

[djs]

Well, the HOA can definitely go bankrupt. A lot of them are nowadays, though the developers try to prevent this.

But again, they try to stay in business if at all possible.

They should not have let the policy lapse, I'm sure they had money coming in still. But hey, they did.

Is the board responsible? Can they be held accountable? Will the D&O policy pay? I have no idea on the first 2. The developer usually has a 51% controlling interest in the HOA and could have overruled much of what the board said. It would take a review of the facts to know how this will turn out.

Dan

 

[iiinycboi]

Hmm... interesting, the low rise condo's here.... the developers give all the rights to the unit owners after they all been sold.

Let me double check this, maybe its different here. Unless we're talking about renting from a condo complex. The ones i work with the condos are bought from the developer and all the rights are split down the middle.

 

[djs]

Yeah, HOA's are an interesting thing, you have to follow the money.

The rights go to the unit owners, sure. The money though is slightly different. Usually some entity (I call it the developer, but it may not be) has a significant interest in the HOA, frequently 51% or so. Basically, all they do is dictate who 'administers' the HOA and collects an administration fee. These are usually pretty significant.

Want to paint the walls a different color? They won't care, as long as the fees are paid.

Dan