Form CP 17 10: Condominium Association Coverage
1. What the form is
The CP 17 10, Condominium Association Coverage form, is a commercial property insurance form that modifies the standard Building and Personal Property Coverage Form (CP 00 10) to address the unique insurable interests of a condominium association. Its primary purpose is to provide coverage for property that is commonly owned by all unit owners in a condominium or is the association's responsibility to insure according to the condominium association agreement or bylaws. This includes the building(s), common areas, and certain types of property within individual units if the association agreement dictates. The form clarifies what property is covered under the association's master policy versus what might need to be covered by individual unit owners' policies (like an HO-6 policy). Importantly, the CP 17 10 states that the association's insurance is primary over any insurance carried by individual unit owners for the same property.
2. Classes of business it applies to
This form is specifically designed for condominium associations, which are responsible for insuring the common elements and, in many cases, portions of the individual units. Real-world examples include:
- Residential Condominium Associations: This is the most common use, covering the buildings, lobbies, hallways, recreational facilities (pools, clubhouses), and other shared property in a residential condo complex. It may also extend to fixtures, appliances, and improvements within individual units if mandated by the association's governing documents.
- Commercial Condominium Associations: While less common, some commercial properties are set up as condominiums (e.g., office parks, retail centers where individual units are owned). The CP 17 10 would apply to the association responsible for the common areas and structure of these commercial condominiums.
- Mixed-Use Condominium Associations: Developments that combine residential and commercial units under a single condominium association would also utilize this form for the association's insurable interests.
It's crucial to note that this form is not intended for cooperative associations or homeowner associations that do not have the same divided ownership structure as condominiums; those entities would typically use the standard CP 00 10.
3. Special considerations
Several important factors come into play when using the CP 17 10:
- Condominium Association Agreement/Bylaws are Key: The extent of coverage provided by the CP 17 10 for property within individual units (like fixtures, improvements, alterations, and appliances) is heavily dependent on what the condominium association agreement or bylaws require the association to insure. If the bylaws state the association is responsible, the CP 17 10 can provide that coverage. If not, the unit owner is typically responsible.
- "Bare Walls" vs. "All-In" Coverage: The specific requirements in the association documents often determine whether the master policy provides "bare walls" coverage (covering only the structure and common elements, leaving unit interiors to unit owners) or "all-in" coverage (covering the building, common elements, and original fixtures/installations within units). The CP 17 10 can accommodate these variations based on the declarations and the association agreement.
- Unit Owner's Insurance (HO-6): The CP 17 10 is designed to work in conjunction with individual unit-owner policies (typically HO-6 or a commercial unit-owners form like CP 00 18). The CP 17 10 is primary for property it covers, with the unit-owner's policy being excess for that same property. Unit owners need an HO-6 to cover their personal property, any parts of the unit they are responsible for (per the bylaws), and to cover deductibles on the master policy.
- Valuation: The building coverage limit is typically based on 100% replacement cost value, reflecting the insuring responsibilities of both the association and individual unit owners as defined by statute or governing documents.
- Waiver of Rights: The form includes a provision that waives the insurer's rights to recover payments from any unit owner of the condominium shown in the Declarations, which is an important feature for condominium associations.
A real-world example of a special consideration: If a condominium's bylaws state the association is responsible for insuring built-in appliances within each unit, the CP 17 10, when properly endorsed and with adequate limits, would cover a loss to those appliances. If the bylaws make unit owners responsible, the CP 17 10 would not cover them, and each unit owner would need to rely on their HO-6 policy.
4. Key information for agents and underwriters
Agents and underwriters need to pay close attention to the following when dealing with the CP 17 10:
- Thorough Review of Association Documents: The condominium declaration, bylaws, and any other governing documents are paramount. These documents dictate the association's insurance responsibilities and, therefore, how the CP 17 10 should be structured. Underwriters must obtain and review these documents to determine the proper scope of coverage.
- Accurate Building Valuation: Determining the correct replacement cost for the entire condominium structure, including common elements and potentially interior unit components (if required by the bylaws), is critical to avoid underinsurance and coinsurance penalties.
- Defining "Building": The CP 17 10 clarifies that building coverage is exclusive of items like fixtures found in individual units, unless the association agreement requires the association to insure them. This differs from the standard CP 00 10. Agents must clearly identify which elements are considered part of the "building" under the association's responsibility.
- Personal Property: The definition of "Your Business Personal Property" in the CP 17 10 is adapted for condominiums and covers personal property owned by the association or indivisibly by all unit owners. It does not include personal property owned solely by an individual unit owner.
- Coverage Gaps: A common gap occurs when there's a mismatch between what the association bylaws require the association to insure and what the CP 17 10 actually covers, or between the CP 17 10 and the unit owners' HO-6 policies. Agents must counsel both the association and unit owners on their respective responsibilities.
- Deductible Considerations: The master policy deductible can be substantial. Unit owners should be aware that they might be assessed a portion of this deductible, and their HO-6 policies may provide coverage for this assessment.
- State-Specific Condominium Acts: Many states have specific laws governing condominium insurance requirements. These laws can influence what an association is required to insure and should be considered alongside the association's own documents. For example, Massachusetts General Law 183A outlines requirements for common area insurance.
For example, an underwriter assessing a risk for a condominium association should request and meticulously review the association's bylaws to understand if the association is responsible for "walls-in" coverage, including fixtures and appliances within units. This will directly impact the required building limit and the premium. The agent should then ensure the declarations accurately reflect this and advise unit owners accordingly about their HO-6 policy needs.