The American Association of Insurance Services (AAIS) has developed two new endorsements options that provide coverage for a homeowner’s or unit-owner’s obligation to pay an insurance deductible under a master policy covering a homeowners or condominium association.
The endorsements have been made available countrywide on an advisory basis and are available to companies that use the AAIS Homeowners and Mobile-Homeowners Programs.
Members of residential associations are often required to pay deductibles under master policies held by the associations. In 2003, Virginia enacted a law making a condominium unit-owner responsible for paying the deductible on an association master policy in certain circumstances, whether or not the unit-owner was negligent.
For years, homeowners and unit-owners policies have provided coverage for association loss assessments under separate sublimits. That coverage typically applies to amounts assessed by an association as the result of loss to property owned collectively by its members, but those sublimits typically cannot be increased for assessments that result from association policy deductibles.
The principal new AAIS endorsement option adds incidental property coverage for “Association Deductible” to an AAIS-based Homeowners or Mobile-Homeowners policy. The endorsement establishes a separate sublimit for deductible charges that is comparable to traditional sublimits for loss assessments, but the association deductible sublimit can be increased.
The Association Deductible coverage applies if:
–The damaged property would be eligible for coverage under the policy if it were owned by the insured;
–The loss is covered under the association’s master policy;
–The loss is caused by an peril insured against under the policy, other than earthquake; and
–The deductible assessment occurs during the policy period.
The endorsement also modifies existing policy provisions regarding loss assessments and insurance under more than one policy when Association Deductible coverage is provided. Other endorsements are introduced to address earthquake losses and premises other than the location described in the policy declarations.
For more information contact Richard Anderer at: richarda@AAISonline.com.
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