The past winter in Texas brought to light how quickly property can be damaged or outright destroyed. Weather events, fires, flooding and other issues can leave a property owner wondering what insurance will cover and when they can set about rebuilding and repairing. For condominium owners, they rely on the insurance coverage overseen by the property owners’ association (POA). Knowing the rules for insurance coverage and details about how repair and replacement is handled is key.
Basics of insurance law for condominium repairs or replacement
The law requires that property that has been damaged or destroyed will either be replaced or repaired by the POA unless it is deemed illegal by the health and safety laws or 80% of the owners vote that they do not want to rebuild. All unit owners have the right to vote to make this determination independent of whether they suffered damage or not. People who are thinking about their options if this occurs should also be aware of the limits on what an insurer is obligated to pay.
Simply voting not to rebuild will not add to the liability based on the policy. In other words, it will not be a total loss and warrant a full payment for its value simply based on the unit owners choosing not to rebuild. When the whole property is not replaced or repaired, insurance will be paid to repair the area that suffered damage so it is in the same condition as the rest of the condominium.
The insurance deductible could also be important. If the repairs to a unit or common element of the condominium is less than the deductible, whoever is responsible for the repair without insurance factored in will be asked to pay for it. Responsibility for damage could be placed on a unit owner or a guest of the owner if the damage was due to an omission on their part.
Condominium associations should understand insurance law and more
There are many benefits to condominium ownership and POAs are in place to ensure the rules are adhered to and to address concerns as they arise. When there is damage to the property, it will impact everyone who is part of the community. Most might think insurance law will protect them and repair and replace regardless of the details of the incident that led to the damage or destruction. In some cases, it does. However, there is nuance that could be complicated and lead to dispute. For these complex issues, the condominium association should consider the value of professional representation to address insurance and other challenges.