If your association is a condominium community created after July 1, 1992 (post-CCIOA), take a look at your property insurance policy and see if the association maintains a “bare walls” policy. If so, this insurance policy may be subject to challenge regardless of what your governing documents might require.
A “bare walls” policy typically covers components up to and including drywalls of the unit with everything else inside the condominium to be insured by the owner. This means the owner insures all finished surfaces (such as carpeting, hardwood flooring, paint, and paneling) as well as fixtures (cabinets, railings, bathtub, etc.) in the unit.
Section 313(2) of CCIOA requires post-CCIOA associations to insure condominium units (regardless of what the association’s governing documents may provide). Although this section allows associations to exclude finished surfaces of walls, floors, and ceilings from coverage, it does not allow associations to exclude any other components of the units, such as fixtures. Because “bare walls” policies do not cover fixtures inside units, some individuals might take the position that such policies violate the requirement of Section 313(2) of CCIOA.
If your community fits the above criteria and currently carries a bare wall policy on the units, you should consult with the association’s legal counsel to determine the best way to move forward.
If you have questions or want to know more about this insurance requirement, please contact a HindmanSanchez attorney at 303.432.9999.