Why do Owners Associations need insurance?
The establishment of the Owners Association creates an unlimited liability for its members, and each member has joint and several liability to the Owners Association. For this reason, the Jointly Owned Property Law requires a certain minimum amount of insurance cover to protect the unit owners.
- Building insurance
Is required to cover the full replacement and reinstatement cost to rebuild the building to its new condition in the event it were destroyed on the last day of the insurance policy. It should be noted that the building policy does not include the contents and improvements made by an owner within a unit.
- Public Liability or Third-Party Liability
The Owners Association has a responsibility to hold insurance cover to guard against liability for damages or bodily injury to owners, tenants or visitors using the common areas.
- Fidelity guarantee
This insurance policy covers the Owners Association against fraudulent acts by the Board.
- Board members’ liability
It is advisable to procure cover for any wrongful act of Board members in any decision it makes. This includes any dishonest or fraudulent act, criminal act, or malicious act or unintentional omission.
- Machinery breakdown
Covers the Owners Association against accidental breakdown of electrical, electronic and mechanical plant and equipment such as a lift and swimming pool motors.