Property Insurance Questions & Discussions

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Do all 2 unit condo master policies require an insurer

Posted May 18 2022, 04:26

My wife and I own one unit of a 2 unit building which we are living in. For whatever reason, we have an HOA for the building. The other owner own rents the upstairs.

When I started inquiring about coverage for STR in my unit for part of each year (~3-6 mos), the commercial agent claimed that the HOA master policy we had didn't cover the upstairs owner's rental. I'm looking at the insurance binder now for the "Business Owner's Policy" for the HOA, and I see the words "landlord" and "tenant" all over (e.g. "Covered Property, as used in this policy, means [...] Your personal property in apartments or rooms furnished by you as landlord"). It's possible that before my time running the HOA, the original policy was purchased when there was no tenant, but neither I nor the prior HOA head was ever asked about rentals over the past 7 or so renewals. 

Now the agent is telling me that we have a gap in coverage now, and no insurer will insure us unless we have a property manager. They have yet to give me a hard and fast requirement of what qualifies as property manager. E.g. can I or the other owner be property manager? They said something to the effect of "it would be good if it were a professional company that is insured" but did not go so far to say that insurance was a requirement. 

This seems excessive for a 2 unit building where the owners are around and care about the property. Are there insurers that will let me focus money and effort caring for the property rather than retaining some token property manager that has little to no function other than what is needed to help us check a box? 

Chittenden County, Vermont

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Jason Bott
  • Insurance Agent
  • Milwaukee, WI
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Jason Bott
  • Insurance Agent
  • Milwaukee, WI
Replied May 18 2022, 06:13

@Jake Durell many insurance companies who insure condos only want Owner Occupied condos.  It sure sounds like you are with one of them. Your best bet is to find another insurance carrier who is comfortable with the rental occupancy.   With a 2 unit building that should not be difficult to do.

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Replied May 18 2022, 10:23

Thanks @Jason Bott! Unfortunately, I am still finding it difficult. I've spoken with several today. They either won't cover a small HOA, or require some unspecified level of management. If you know anyone serving VT, please let me know.

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Jonathan R McLaughlin
  • Rental Property Investor
  • Boston, Massachusetts (MA)
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Jonathan R McLaughlin
  • Rental Property Investor
  • Boston, Massachusetts (MA)
Replied May 18 2022, 11:15

yea, in their and many minds running an STR is a business, not being a landlord. Try commercial insurance. Don't put it off, as you may well be uninsured. I think its fair the guy running the STR pays any extra, but he may a have different opinion

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John Mocker
  • Insurance Agent
  • Norwalk, CT
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John Mocker
  • Insurance Agent
  • Norwalk, CT
Replied May 18 2022, 13:48

Jake,

I've insured two unit condo associations.  The Commercial policy for the Association covers just the Association property as described in the bylaws.  They generally are described as common elements and limited common elements.  Further, the boundaries of the units should be spelled out in there.  Those building elements (could be cabinets, fixtures, interior walls, etc.) that are part of the unit would be your responsibility as well as all your personal property (unless the bylaws say differently).  Normally there is a Business Owners policy or package policy that the Association purchases.  The Unit owners would normally have Condo Unit owners policy (form of Homeowners insurance) for their belongings and parts of the building they own.  Any Renters would have to get Renters Insurance for their belongings.  

With Condo associations, the percent of owner occupied vs rented units will often determine eligibility and also rate.  There are some markets that will write a high percentage of rental units but they rate it like an Apartment building.   If your agent can not find a market for you, PM me and I will let you know some companies that may be able to help.