Essential insurance for owners’ associations

In Southern We believe that there are insurance policies which are not just important but essential for the peace of mind of the owners’ association.

Community insurance policies

How many times have we found ourselves at a homeowners’ association meeting where a discussion or suggestion has arisen about whether it is advisable or necessary to take out insurance for the association?.

Housing association insurance acts as a protective shield against a wide variety of claims and incidents that may occur in the properties within the housing association. It can cover numerous types of incidents, ranging from a breakdown of the communal lift, a fire in one of the flats within the estate, or water damage caused by flooding, amongst many others.

Finding suitable and essential insurance for the owners’ association is one of the main tasks of the governing board of a residents’ association, as it is their responsibility to protect the homes and communal areas of all co-owners. For this reason, securing the best insurance with the most comprehensive cover is often one of the most important tasks that your community’s management agency may have to handle.

Why take out community insurance?

Every community needs insurance tailored to its specific needs; it is therefore essential that, when applying for insurance, the particular circumstances of the community are disclosed in order to optimise the terms of the policy and its price.

Taking out insurance for our residents’ association can certainly be advantageous. Not only does it allow us to live with the peace of mind that comes from knowing that any accident or unforeseen incident will be covered by our insurance, but it also provides us with a range of benefits of various kinds that we should take into account.

For example, thanks to having a community insurance policy, we can say goodbye to hefty one-off contributions. Repairing this damage often involves – more often than we care to admit – the payment of high one-off contributions, which owners sometimes find difficult to afford.

Furthermore, the amount of the additional levy can sometimes lead to arguments amongst neighbours, thereby damaging the harmonious atmosphere within the community. With community insurance, depending on the cover we have taken out, the insurance company will cover all costs arising from the incident.

Taking out insurance also helps the community to save money, not only because it avoids having to pay additional levies, but also because, if you are aware of the cover it includes, you can exclude those items from your personal home insurance policy

Finally, it is worth noting that some insurance companies offer discounts on renewal premiums if no claims have been made previously.

Is it compulsory to have insurance for the residents’ association?

At national level, there is no law requiring us to take out this type of insurance. According to the The Horizontal Property Act (LPH), the community may take out an insurance policy to cover damage caused to the property or enter into a long-term maintenance contract for the building and its general facilities.

According to Article 9 of the aforementioned Act, it is specified that it is indeed necessary to have a reserve fund, that is to say, an annual sum to cover the costs of conservation, maintenance and repair of the building, or costs arising from fires or floods.

Although there is no law at national level that explicitly requires it, there are certain regulations that make it compulsory to take out residents’ association insurance. Specifically, it is currently compulsory in the Community of Madrid and the Valencian Community, whilst it is voluntary in the rest of the country.

What do these insurance policies cover?

Let’s start by saying that these insurance policies are very similar to home insurance in terms of cover, but rather than covering a single property, they cover a block of flats, including its communal areas, garages and storage rooms.

Each company sets out the basic cover provided by its owners’ association insurance policy, with the scope varying from one policy to another. However, there are certain elements that are common to the vast majority of insurers, which we list below.

Third-party liability:

It covers any damage or injury that may be caused to any person passing underneath or in the vicinity of the building.

Property damage:

The most common causes are usually damage caused by fire, an explosion, a lightning strike or other atmospheric phenomena.

Water Damage:

It covers water damage to pipes belonging to the residents’ association, whilst damage to private pipes is covered as an optional extra.

Community Support:

Most insurers provide a 24-hour community support service, 365 days a year.

Pest Control and Prevention:

They offer a comprehensive service to eradicate infestations of cockroaches, moths and so on from every corner of the estate.

Depending on the neighborhood community, insurers also offer a wide catalog of optional coverage to complete the policy. These tend to be the most common

• Theft.

• Cosmetic damage.

• Broken glass, mirrors, etc.

• Legal defence.

• Damage to vehicles inside the garage.

• Blockages in communal pipes and downpipes.

• Accidents involving staff employed by the local authority.

How do you take out a good insurance policy?

Firstly, we need to gain a detailed understanding of our community’s actual needs and take into account all those that may need to be addressed.

As a general guide, it is worth noting that the most common claims are those relating to water damage, such as leaks caused by rain or by a pipe in poor condition. Next most common are claims relating to third-party liability.

Ultimately, the best option is always to seek proper advice from a professional to ensure that all your residents’ association’s needs are met. At Meridional Team, we can help you find and take out the insurance policy that best suits your residents’ association’s needs.