30th Sep 2019

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In general

The CC&R’s (code, covenants, restrictions) will often require the Association to obtain and maintain a master or blanket policy of all risk property insurance. The policy is to name as insureds:

  1. the association,
  2. the owners, and
  3. all mortgages of record, as their interests may appeal.

See Western Heritage Insurance v. Frances Todd, Inc. (2019) 33 Cal. App. 5th 976, 981. See § L57 LOSS PAYABLE [§ L59:1].

The CC&R’s will also often provide that:

  1. any insurance maintained by the Association contains a “waiver” of subrogation as to the Association, its officers, owners and occupants of the units. See § L27 LESSEE, SUIT AGAINST, BY LESSOR [§ L27:3.1 Waiver of subrogation].
  2. prohibits an individual owner from obtaining fire insurance while allowing an owner to obtain individual liability insurance. [Western Heritage Insurance v. Frances Todd, Inc. (2019) 33 Cal. App. 5th 976, 981] See § C73 CONDOMINIUM UNIT OWNERS POLICY [§ C73:1 Unit owners insurable interest].

OBSERVATION: Condominium unit owners may insure items of real property pertaining directly to the owner’s residence premises. The scope of insurance responsibility is generally set forth in standard CC&R documents. [Palacin v. Allstate Ins. (2004) 119 Cal. App 4th 855 discussed § C73 CONDOMINIUM UNIT OWNERS POLICY [§ C73:1 Unit owners insurable interest].

Condo association leases units to others; lease provisions, subrogation action against lessee

California precludes a subrogation action by the fire insurer of the lessor against a lessee where a lessee’s negligence causes a fire, but the policy is intended to benefit the lessee. [Western Heritage Insurance v. Frances Todd, Inc. (2019) 33 Cal. App. 5th 976, 985] See § S 105 SUBROGATION [§ S105:1.3 Insurer of landlord has no right of subrogation for fire loss against tenant].

Condo association as landlord

With respect to the association’s duty to purchase insurance and undertake other business activities for the benefit of unit owners, the Association has been found to occupy the position of “landlord” of the project. [Western Heritage Insurance v. Frances Todd, Inc. (2019) 33 Cal. App. 5th 976, fn. 8] See § H15 HOMEOWNER’S ASSOCIATION [§ H15:1.3 Homeowner’s association obligations to its members].

References in bold are to Mr. Cornblum’s text CALIFORNIA INSURANCE LAW DICTIONARY AND DESK REFERENCE, 2019 Edition, published by ThomsonReuters (1-800-344-5008) to order 3-Volume text). This text also available to search on Westlaw.

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