When it comes to condominium insurance, understanding who is responsible for what isn’t guesswork, it’s a legal obligation. For associations, the foundation of that understanding lies in one key document, your Association’s Declaration.
At American Heritage Insurance Group, the “Declaration-First” Audit Process begins by reviewing this governing document before discussing policies or pricing, because the Declaration defines the Association’s insurance obligations and those obligations should drive every coverage decision. In this blog, we are going to answer some common questions that arise when customers are needing to understand how they need to insure their condominium unit.
- How do we determine the specific insurance obligations of our Condo Association?
Answer: At American Heritage Insurance Group, we start by reviewing the Association’s Declaration with you to clearly define responsibilities between the Association and the Unit Owner.
Every condominium community operates under legally binding governing documents, typically which include the Declaration and the Bylaws. The Declaration is our insurance roadmap. It outlines:
- What qualifies as common elements
- What structural components the Association must insure
- What portions of the property fall under unit owner responsibility
- Whether the Association’s insurance coverage requirements are “bare walls,” “single entity,” “all-in,” or something else.
Without reviewing the Declaration first, an insurance policy may unintentionally over-insure or under-insure the Association and the unit owner.
A Declaration-First review tactic ensures that:
- Insurance coverage aligns with legal requirements of the Declaration.
- The Association fulfills its documented obligations.
- Unit owners understand where their individual policies must respond.
This foundational step prevents costly coverage gaps and strengthens the Board’s compliance posture.
- What is the difference between the Declaration and the Bylaws of a Condominium Association?
Answer:
- The Declaration is a foundational, legally recorded document that establishes the condominium, defines property boundaries, and outlines ownership rights and restrictions (including insurance responsibilities).
- The Bylaws govern the operational and procedural aspects of the association, such as annual member meetings, board elections, meeting procedures, and voting.
- Why must a Condominium Board review their building coverage limit annually?
Answer: Every Condominium Board has a fiduciary duty to ensure insurance limits reflect current replacement cost estimates and legal requirements.
Building replacements costs can fluctuate, code requirements can evolve, and property values can shift. If coverage limits remain static while costs increase, the Association could face significant financial shortfalls in the event of a claim.
An annual review allows the Board to:
- Verify that building limits match updated replacement cost estimates.
- Confirm deductibles are appropriate and financially manageable.
- Ensure ordinance and law changes for the property are reflected in current coverage.
- Document due diligence in fulfilling fiduciary responsibilities.
Condominium boards are entrusted with protecting shared assets. Regularly reviewing coverage limits isn’t optional, it’s part of responsible governance.
- What is included in a side-by-side insurance comparison?
Answer: At American Heritage Insurance Group, we provide a diagnostic report that clearly shows “What You Currently Have” versus “What We Recommend.”
After reviewing the Declaration and current policies, the next step in the process is a structured comparison. This side-by-side analysis provides clarity and transparency for Board decision-making.
A typical comparison includes:
What You Currently Have
- Current carrier(s)
- Policy limits
- Deductibles
- Endorsements
- Notable exclusions
What We Recommend
- Adjusted building limits (if needed)
- Coverage enhancements to meet Declaration requirements
- Risk management improvements
- Identification of coverage gaps
This format makes it easy to identify:
- Where coverage already satisfies obligations
- Where limits may be insufficient
- Where enhancements may strengthen protection
The result is not simply a quote, it’s a documented evaluation of alignment between governing documents and insurance protection.
The Declaration is your Association’s roadmap. Reviewing it first and pairing it with a structured side-by-side comparison transforms insurance from a renewal transaction into a strategic governance exercise.