Homeowner Associations » Commercial Property

Introduction to Commercial Property Insurance

Commercial Property Insurance covers first-party claims to Real Property owned by the insured. Depending on the Association, insurance coverage for the interior of the dwelling can either be 1) the owner’s responsibility, or 2) the association’s responsibility.

1) In a Condominium Association or Townhome, the Real Property of the association will typically consist of all common areas, including the shell of the unit itself. In this type of project, the association will usually be responsible for insuring the structure. Depending on the CC&R’s (Conditions, Covenants and Restrictions – the governing document), the association may also be responsible to insure the betterments and improvements within the unit, as well as all attached fixtures and appliances.
2) In a Planned Unit Development (PUD), the Real Property of the association consists of the common area only and does not extend to the individual units. Property insurance for a PUD will cover common area elements such as pools, spas, clubhouses, etc, but will not extend coverage to any unit owner’s structure.

In addition to Real Property, a Commercial Property Policy for the association can also include coverage for Business Personal Property, Building Ordinance and Loss of Use coverage (see definitions).

There are three types of Property policy “forms:” Basic, Broad and Special. Depending on the policy, coverage against certain perils can differ drastically.

Real Property can be described as all permanent structures up to and including the unfinished floors, walls and ceilings. Depending on the language contained in the policy, it can also include completed additions, fixtures, and permanently installed machinery and equipment.

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