Have you ever said the words, “It’s all right there in black and white”?


If ever there is a dispute or uncertainty of the expectations between two parties, the one that utters these words will surely be the victor. When we have the terms and responsibilities of an agreement in writing, we know exactly the expectations placed upon each party to the agreement. Associations enter into agreements all the time for management services, banking, landscaping, snow removal, maintenance, etc. These types of contracts are very clear as to the services which will be performed, by whom, the time frame in which they will be performed, and the cost and time frame for payment.


There is one contract that when it is agreed upon, the terms are black and white but when the service is called upon, the black and white mix and appear to be gray. Boards and property managers alike often feel this way about the insurance contracts for the association.


The insurance contract or policy, clearly outlines such things as the limits of coverage for property and liability losses, how much the insured is paying for these coverages,


38 | COMMON INTEREST®


the duties of the insurance company as well as the insured in the event of a loss, and the covered causes of loss and exclusions. On the surface, it all seems very clear.


So, how can it be that when a board member or property manager contacts their insurance agent to inquire about coverage for property damage which has occurred, there is a pause followed by a, “hmmm,” and then a barrage of follow up questions?


The policy states in black and white if the loss will be covered. However, in the case of a condominium or townhome association, determining the association’s responsibility and the unit owners’ can be a very gray area. Even though the association’s insurance is primary, this does not necessarily mean the association’s policy will be required to pay for all of the damages to a unit.


The next step is to consult the Declarations and By-Laws of the association. The first few pages provide definitions of the terms used throughout the document. It is important


A Publication of CAI-Illinois Chapter


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