Homeowners’ association insurances are a basic tool to address the everyday contingencies of the properties and common areas of the buildings and residential areas. They cover the most profitable guarantees included in each modality and they offer also benefits and additional advantages to the insured which are protected in the presence of any setback related with their association.
At a state level, there is not a disposition that forces homeowners’ associations to subscribe to an insurance policy, although the Commonhold Property Act indicates that with a charge to the reserve found, the association could subscribe a contract of this kind.
The autonomous communities have competences to grant the obligatory nature of the policies, and such are the cases of the Community of Madrid and the Community of Valencia where the associations are enforced to subscribe an insurance.
Before signing an insurance, each homeowners’ association must be sure that the content of the building is properly valued. In the event of accident, it can be very unfavourable for the association if, in the policy, the value of the property is inferior to its real value. In the same way, an over-valuation of the property is also counter-productive, because that way the association would have to pay a higher fee for the insurance unnecessarily. It is fundamental that the policy covers the real value and avoid unpleasant surprises.
Regarding the coverage of civil liability, the owners can compare the offers of the different insurance companies, but the standard for the associations is between 150,000 and 200,000 euros for average qualities and for buildings with no more than 25 years. This amount can change in the case of old buildings, in this case we should consider that the fact of covering the civil liability in the policy does not imply the coverage of the possible damages to third parties caused by an association breaking.
The basic coverage of these policies place emphasis in the fires and their consequences. It is a compulsory guarantee in every association insurance and for every company, that is why every insurance company include this coverage in their offer.
Another important coverage is the one related to damages by water, especially in buildings with more than 25 years. Through this coverage, the repair of broken community pipes as well as the damages that it may cause in both common areas as well as to third parties caused by these general piping is ensured. At this point it is very important to determine if there exists a deductible or not, and also, if a percentage about the repair will be paid or if a fixed amount will be paid whatever the amount of the damages and the reparation is.
Another incident related to water deals with filtrations: This section must be well specified in the policy because it creates a lot of complaints because it is not well defined in some occasions. Some insurance companies place it attached to the damages by water while other prefer to treat it independently. Depending in one or another, the price can obviously vary.
Other guarantee to be analysed is the one referred to the breaking and its limits regarding the coverage. It is also important the concept of robbery whose inclusion will rise the price of the policy.
The problem of defaulting in the payment of the fees by associates has taken many homeowners’ associations to demand these debts through the insurance, it is an interesting option if it is covered by the document signed with the insurance company.
Finally, in the big cities, the problem of rodents and cockroaches causes a great concern in the tenants, that is why insurance companies are including the protection against insects and the rodent control as a fixed coverage to gain the credibility of a more demanding clientele.
By Massimo Filippa
Information given is offered for information purposes, excluding the company and the author from all responsibility, not constitute an official publication nor will it be binding. We always recommend check with your lawyer or adviser.
Massimo Filippa
