Southern Colorado Insurance Center Blog

All You Ever Wanted to Know About Insurance

How well do you know condo insurance exclusions?

When a condo is rented out by its owner, the owner's personal property there may no longer be insured.
Question: We insure a Condo Trust under a business owner's policy (BOP). A condo unit owner was injured in a slip & fall in the condo parking lot. The BOP policy excludes medical expense coverage for “any insured." According to our Condo Association Coverage Charges endorsement, which expands the definition of Insured: “...Each individual unit owner of the insured condominium, but only for liability arising out of the ownership, maintenance, or repair of that portion of the premises, which is not reserved for that unit owner’s exclusive use or occupancy." Does this make the injured condo unit owner an “insured” under the policy of the Condo Trust and hence excluded from the medical expense coverage under the Trust’s policy?


Answer: Yes, you have surmised correctly that the endorsement does indeed make the injured condo unit owner an “insured” under the policy of the Condo Trust and hence excluded from the medical expense coverage under the Trust’s policy.
Liability coverage is third party coverage, and does not provide first party coverage to the insured. The liability section of the BOP form provides coverage for liability sums that an insured is legally obligated to pay as a result of “bodily injury” “property damage” or “personal and advertising injury” to which the insurance applies. There is an applicable exclusion: Medical expenses coverage excludes expenses for “bodily injury” ... To any insured, except "volunteer workers."
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The Condo association Coverage Changes endorsement adds that the condo unit-owner as an insured for liability covered by the policy, but the exclusion for medical expenses coverage to an insured would apply and no medical payments coverage would be available to the insured.

Question: When a condo owner makes improvements to the condo, for example new kitchen cabinets, and later sells the condo, are the cabinets still betterments and improvements for the new owner who purchases the condo?

Answer: The condo policy does not define "improvements and betterments." The policy provides coverage for betterments and alterations. While the new owner did not make the alterations, they are still alterations all the same. Also, the state statutes determine whether the unit owner or the condo association is responsible for appliances and cabinets. In our opinion the alterations still count as alterations under the new owner and should be insured as such.

Question: What is the correct coverage form to insure a condominium unit that is rented or held for rental, but is not the insured’s/owners’s residence premises? 

Answer: The ISO HO 17 33 provides coverage for condominiums rented to others. Personal property of the insured is excluded as he is not present at the residence, and theft is excluded for money, securities, bullion, gold, goldware, personal records, tickets, jewelry, watches, furs, and gemstones. Business is also excluded except for the rental of the unit itself. The rest of the HO 00 06 applies as normal.

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