1. Forms
2. CP
3. CP-17-11

Form CP 17 11: Condominium Commercial Unit-Owners Coverage

1. What the form is

The CP 17 11, Condominium Commercial Unit-Owners Coverage form, is an endorsement that modifies the standard Building and Personal Property Coverage Form (CP 00 10) to address the specific insurance needs of businesses that own and operate out of commercial condominium units. Its primary purpose is to provide coverage for the insured's business personal property. Crucially, it also allows coverage to be extended to improvements and betterments made by the unit owner. This is vital because the condominium association's master policy typically covers the building shell and common areas, but not necessarily alterations or upgrades made within individual commercial units. The CP 17 11 helps bridge this potential coverage gap. It ensures that the commercial unit owner's investments in their specific space are protected.

2. Classes of business it applies to

This endorsement is designed for a wide array of businesses that own their commercial condominium units rather than leasing them. Examples include:

• Professional Offices: Such as law firms, accounting practices, medical or dental clinics, and architectural firms that own their office condo. For instance, a dental practice that has invested heavily in specialized plumbing, cabinetry, and lighting within its unit would use this form.
• Retail Stores: Boutique shops, specialty stores, or small-scale retailers operating from a commercial condominium unit. A high-end clothing boutique that has installed custom shelving, display cases, and lighting would benefit from this coverage.
• Service Businesses: Businesses like real estate agencies, insurance agencies, or consulting firms that own their unit. A real estate office that has built out individual agent offices and a reception area within their condo would find this form applicable.
• Restaurants or Cafes: Smaller food service establishments that own their condominium space. For example, a cafe owner who has installed a commercial kitchen, custom seating, and specific decor would need this endorsement.

Essentially, any business that owns a commercial condominium unit and has business personal property and potentially significant improvements and betterments within that unit is a candidate for this form.

3. Special considerations

• Interaction with Condominium Association Policy: It is critical to understand the scope of the condominium association's master policy. The CP 17 11 is designed to complement, not duplicate, the association's coverage. The association's policy often covers the main structure and common elements, while the unit owner is responsible for the interior space from the "walls-in," including improvements and betterments. The CP 17 11 typically makes the unit owner's insurance excess over the association's coverage for property covered by both.
• Improvements and Betterments: A key feature of this endorsement is its ability to cover improvements and betterments made by the unit owner. This can include items like upgraded flooring, lighting fixtures, built-in cabinetry, or specialized wiring. The value of these improvements can be substantial, and ensuring they are adequately covered is a primary reason for using this form. For example, if a fire damages a unit, the association's policy might only restore it to its original "bare walls" condition, leaving the unit owner to pay for rebuilding expensive custom improvements unless covered by the CP 17 11.
• "Bare Walls" vs. "All-In" Coverage: The extent of the association's master policy can vary. Some are "bare walls" (covering only the basic structure), while others are "all-in" (covering fixtures and installations within the units). Understanding the master policy's terms is crucial to avoid gaps or overlaps in coverage. The CP 17 11 helps fill gaps left by a "bare walls" policy.
• Loss Assessment Coverage: While the base CP 17 11 focuses on the unit owner's property, commercial condominium unit owners should also consider Loss Assessment Coverage (often available via a separate endorsement like the CP 04 18). This covers the unit owner's share of assessments levied by the condominium association for damage to common property if the association's insurance is insufficient. For instance, if a hurricane damages the condominium building's roof and the association's policy limit is exhausted, the remaining repair costs might be assessed to all unit owners. Loss Assessment coverage would help pay the insured unit owner's portion of this assessment.

4. Key information for agents and underwriters

• Accurate Valuation: Proper valuation of both Business Personal Property and Improvements and Betterments is essential. Underinsuring can lead to significant out-of-pocket expenses for the insured at the time of a loss, especially considering coinsurance penalties. Agents should work closely with clients to detail and value all improvements.
• Review Condominium Documents: Underwriters and agents should review the condominium association's bylaws and master insurance policy. This helps determine the extent of coverage provided by the association and what needs to be covered under the unit owner's policy, preventing gaps and overlaps.
• Coinsurance: The Building and Personal Property Coverage Form (CP 00 10), which the CP 17 11 modifies, typically includes a coinsurance clause. Agents must explain this to the insured and ensure that limits are adequate to avoid penalties.
• Coverage Gaps: A common gap arises when unit owners mistakenly assume the association's policy covers all their interior build-outs and business personal property. The CP 17 11 specifically addresses this. Another potential gap is loss assessment, which needs separate consideration.
• Risk Assessment: Underwriters should consider the nature of the business occupying the unit, the types of improvements made, and the overall risk profile of the condominium complex. For example, a restaurant unit might have higher fire risks associated with cooking equipment compared to a professional office.
• Pricing: Pricing will depend on the limits of liability for business personal property and improvements and betterments, the causes of loss selected (Basic, Broad, or Special), deductibles, and any optional coverages chosen. The construction of the building and the occupancy of surrounding units can also influence pricing.