In an industrial condominium setting, both unit owners and the condominium association hold distinct insurance obligations to protect property, operations, and shared interests. These obligations are typically governed by the condominium declaration, association bylaws, and applicable state laws. Comprehensive insurance planning ensures proper risk management, facilitates lending, and safeguards against property damage, liability, and business interruption. Below are five critical categories outlining the respective insurance responsibilities.
1. Condominium Association Insurance Responsibilities
- Maintains a master property insurance policy covering common elements such as roofs, exterior walls, driveways, and shared utilities.
- Carries general liability insurance for accidents or injuries occurring in common areas.
- Covers directors and officers (D&O) liability insurance to protect board members.
- Insures for natural disasters and vandalism affecting shared infrastructure.
- May include equipment breakdown, crime coverage, or legal defense costs.
2. Unit Owner Property Insurance Obligations
- Must carry commercial property insurance for the interior of their unit.
- Coverage includes interior walls, fixtures, equipment, and tenant improvements.
- Insurance typically extends to inventory, machinery, and business personal property.
- Owners are responsible for damage caused within their unit, even if affecting others.
- Required by lenders and stipulated in the purchase agreement or bylaws.
3. Liability Coverage Requirements
- Owners must maintain general liability insurance for their own operations.
- Covers bodily injury or property damage caused by owner’s business activity.
- Liability limits are usually set by the condo association’s governing documents.
- Association policy does not protect against claims arising within private units.
- Some associations require proof of coverage as part of compliance.
4. Business Interruption and Loss of Income Insurance
- Recommended for unit owners to cover operational downtime due to damage or disaster.
- Helps maintain income flow during reconstruction or property loss.
- Not typically included in association’s master insurance plan.
- May be required by lenders as a loan condition.
- Supports continuity for manufacturers, distributors, and storage tenants.
5. Insurance Compliance and Coordination
- Association policies must comply with state condominium insurance statutes.
- Owners may be required to submit certificates of insurance annually.
- Deductible responsibilities are defined in governing documents.
- Coordination is necessary to avoid coverage gaps or overlaps.
- Insurance disputes are typically resolved through mediation or association rules.
