Connecticut Condo Association Insurance for Small, Self-Managed Associations

In a small Connecticut condo association with no management company, the board usually handles insurance itself. That means a few volunteer owners decide what the master policy covers, how big the deductible is, and how a loss gets paid. This page is for those boards: often 10 units or fewer, frequently a converted older house, a shoreline building or a small townhouse group.

Portsmouth Atlantic Insurance is an independent agency with a Connecticut office at 160 1st Ave, Stratford, CT 06615. On the commercial side we write habitational risks, and a condo association master policy is one of them. In Connecticut, the carriers we work with for condo association master policies include Vermont Mutual, Andover Companies and Providence Mutual. Which one fits depends on the building, its age, its location and what the documents require. We help the board compare them in plain language.

What the master policy usually includes

A typical master package for a small association combines: – Property: the buildings and common elements, insured to replacement cost – General liability: for injuries on common areas such as walkways, stairs, parking and docks – Directors and officers (D&O): protects board members for decisions they make as volunteers – Fidelity / crime: covers theft of association funds by someone who handles money – Optional: umbrella or excess liability, equipment breakdown, ordinance or law, and water backup

Connecticut law: the Common Interest Ownership Act (CIOA)

Most Connecticut condominiums are governed by the Common Interest Ownership Act, Chapter 828 of the Connecticut General Statutes. – Insurance: CGS § 47-255 sets out the insurance an association must carry. – Assessments: CGS § 47-257 covers assessments for common expenses. – Budgets and special assessments: CGS § 47-261e covers how budgets and special assessments are adopted.

Age and size matter. The Act generally applies to communities created on or after January 1, 1984 (§ 47-214). Under § 47-216, only some sections apply to older communities, including the insurance section (§ 47-255). Under § 47-217, a pre-1984 community with no more than twelve units and no development rights is subject to only a few sections unless its declaration has been amended to opt in. Many small Connecticut associations fall into this category. If yours is one of them, your declaration and bylaws matter even more. Have an attorney confirm which rules apply to your association.

Source: Connecticut General Assembly, Chapter 828, Common Interest Ownership Act

Bare walls, single entity or all-in?

The declaration decides where the master policy stops and each owner’s HO-6 policy starts. – Bare walls: The master policy covers the structure. Owners insure interior finishes, fixtures, cabinets and flooring. – Single entity / original specs: The master policy covers the unit as originally built. Owners insure upgrades. – All-in: The master policy also covers improvements owners have made. Owners still need an HO-6 for their belongings, liability, loss assessment and the master deductible.

Boards should send every owner a one-page summary each renewal. It should say which approach the policy uses, what the deductible is and who pays it. Owners can then match their condo (HO-6) coverage to the master policy.

Deductibles, reserves, assessments and HO-6 loss assessment

This is where small associations often get surprised. 1. Master deductible. After a loss, someone pays the master policy deductible. The bylaws may charge it to the unit where the loss started or treat it as a common expense. Coastal policies may carry a separate hurricane or named-storm deductible, which can be much larger. See hurricane deductibles in Connecticut. 2. Reserves. If reserves can absorb the deductible and uninsured repairs, owners may never see a special assessment. 3. Special assessment. If reserves can’t cover it, the board assesses owners under the declaration and CIOA’s assessment and budget rules. 4. HO-6 loss assessment coverage. Each owner’s HO-6 policy can include loss assessment coverage. It can help pay an owner’s share of an assessment that comes from a covered loss to common property, up to that coverage limit and subject to policy terms. Many HO-6 policies start with a low limit, and owners can raise it.

Boards should plan reserves and the deductible together, and tell owners how big a possible assessment could be. Then owners can set their loss assessment limits to match.

D&O for volunteer boards

Self-managed boards make real decisions: hiring contractors, enforcing rules, approving budgets and collecting fees. An owner who disagrees can sue the board. D&O coverage helps defend board members for those decisions. Check whether it covers claims about the association’s work as a property manager, non-monetary claims, and past board members.

Fidelity / crime

In a small association, one treasurer often controls the bank account. Fidelity or crime coverage protects association funds against theft by that person. Set the limit at least as high as the most money the association holds at once, including reserves, and confirm the policy covers volunteer officers.

Coastal associations

Shoreline associations from Greenwich to Stratford and New Haven face: – Wind-driven rain – Storm surge from Long Island Sound – Named-storm deductibles

Standard master policies exclude flood. The main NFIP option for an association is the Residential Condominium Building Association Policy (RCBAP). Private flood may also be available. See flood insurance and coastal home insurance in Connecticut.

What a board should send for a review

1. Declaration and bylaws, especially the insurance article and unit boundaries
2. Current master policy declarations page and renewal
3. Unit count, year built, construction and any updates
4. Reserve balance and the most recent budget
5. 3-5 years of loss history

Frequently asked questions

Does a small self-managed condo association in Connecticut need its own master policy?

Yes. The association insures the common elements and carries liability, and CIOA (CGS § 47-255) sets out the insurance an association must carry. Older communities with twelve or fewer units may be governed mostly by their declarations, so check with an attorney.

What is the difference between a bare walls and an all-in master policy?

Bare walls covers the structure, and owners insure interior finishes. All-in also covers improvements owners have made. Your declaration decides which applies.

Who pays the master policy deductible after a loss?

It depends on the bylaws. Some charge it to the unit where the loss started, and others treat it as a common expense paid from reserves or through an assessment.

What is loss assessment coverage on an HO-6?

It helps pay a unit owner’s share of an association assessment that comes from a covered loss, up to the limit on the owner’s policy.

Does a condo association need D&O and fidelity coverage?

D&O protects volunteer board members for decisions they make, and fidelity protects association funds from theft. Small, self-managed boards are exposed to both.

Is flood covered by a condo master policy?

No. Associations need a separate NFIP (RCBAP) or private flood policy.

Which carriers do you work with for condo associations in Connecticut?

In Connecticut, the carriers we work with include Vermont Mutual, Andover Companies and Providence Mutual. The right fit depends on the building, its age, its location and what the documents require.