Property Insurance and the Uniform Condominium Act
Property insurance claims involving condominiums require consideration of the condominium association’s insurance policy, the unit owner’s policy, and the condominium’s bylaws, declarations, or other governing documents. It is also important to consider the impact of relevant Pennsylvania statutes.
Pennsylvania condominiums formed after October 30, 1980 are governed by Pennsylvania’s Uniform Condominium Act. Among other things, the Act governs the condominium association’s insurance responsibilities. An association is required to insure common elements and units exclusive of improvements and betterments. Practically speaking, this means that the association’s policy should cover the cost to repair the condominium unit in accordance with its original plans and specifications. The cost of replacing any upgraded finishes (i.e. improvements and betterments) would be borne by the unit owner or his or her carrier. Although the Act does not place any affirmative obligations on insurance companies, it provides notice of the minimum level of insurance that should be offered to a condominium association.
Condominiums created prior to the enactment of the Uniform Condominium Act are governed by Pennsylvania’s Unit Property Act. Unlike the Uniform Condominium Act, there is no requirement that the condominium association carry any particular insurance. Rather, the association’s insurance responsibilities are governed by its declarations and/or bylaws.
In recent years, we have noticed an increasing number of disputes involving condominium associations, unit owners, and their respective carriers. While these claims can be complex, they are manageable with an understanding of how the different pieces of the puzzle come together. Please contact any member of our Insurance Industry Group for more information or with inquiries.