Why is it important to have insurance in the community of neighbours?

Welcome to this blog and its insurance section. If you live in a building or in an urbanization, you have probably ever wondered if it is necessary to take out insurance in your neighborhood association. The answer is yes, and in this article we will explain why.

What is neighborhood community insurance?

Neighborhood association insurance is proposed as a protective shield against the number of accidents that can occur in the owners' or neighbors' buildings, such as elevator breakdown, fire or water damage, among many others.

It is the appropriate way to protect the entire building and the owners against any accident. And as we will detail later, the advantages of taking out community insurance are many and range from savings in large amounts to an improvement in coexistence.

Companies specialized in community insurance

At Meridional, we have the experience to identify the essential coverage necessary to protect the Homeowners' Communities. We understand that obtaining insurance for your community can be a daunting task.

As experienced administrators and in collaboration with the best insurance companies on the market specialized in this matter, we can assure you the best coverage at the most competitive price.

Our tailored coverage options are specifically designed to meet the unique needs of Homeowner Associations, Neighborhood Associations grouped together in associations and single-owner rental properties.

 Is insurance mandatory in your neighborhood community?

At the national level there is no law that indicates that it is mandatory to take out home insurance. According to the Horizontal Property Law (LPH), it is necessary to have a reserve fund; an annual sum to cover the conservation and repair works of the building or those derived from fires or floods.

As we have already said, community insurance is not mandatory in Spain, and there is a need for that reserve fund, although there are regional regulations (such as in the Community of Madrid or the Valencian Community) that establish the obligation to have insurance. civil liability or fire.  

Advantages of taking out neighborhood community insurance

• Goodbye to large expenses: By taking out community insurance, you avoid having to face unforeseen and high expenses to repair damages to the common property. This not only eases the financial burden on homeowners, but also gives them peace of mind knowing that any problems that arise will be covered by the insurance company.
• Improves coexistence: By avoiding discussions related to spills and repair expenses for common property, a more friendly and harmonious coexistence environment is fostered in the community of neighbors. Furthermore, by having the support of insurance, faster and more effective decisions can be made in the event of any eventuality that may arise.
• Contributes to savings: By having community insurance, you can avoid unnecessary and duplicate expenses. For example, if you have private home insurance that includes coverage for common property, you can exclude that coverage and reduce the cost of the policy. Furthermore, by avoiding having to deal with spills, economic resources can be used for other purposes.
• Renewal bonuses if no claims occur: By not having to use the insurance, you can obtain a bonus when renewing the policy. This not only means additional savings for the owners, but also indicates that the community of neighbors has kept their property in good condition and has avoided accidents or damages that may require insurance intervention.

What does homeowners' association insurance cover?

Each company establishes the basic coverage of its homeowners' association insurance, including a greater or lesser number. However, there are some that are shared by the vast majority of home insurance companies, such as civil liability, property damage, water damage, community assistance, and pest treatment and prevention.

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

Mandatory coverage of neighborhood community insurance.

• Fire: Coverage for damage from fires, explosions, implosions, lightning, abnormal electrical currents, floods and vandalism.
• Civil liability: covers compensation and bonds for damages to third parties.

Optional coverage of neighborhood community insurance.

• Aesthetic damage: covers the repair or replacement of the building's aesthetics.
• Assistance in the building: special services such as security, urgent repairs, telephone guidance, pest control, etc.
• Garden reconstruction: protect the building's plants and trees.
• General pipe blockages: assumes the costs of unclogging general or community pipes.
• Cars in garage: protection of vehicles in case of fire, lightning or explosion.
• Legal defense: covers legal costs and expenses related to claim processes.
• Breakages: covers damage to insured community property such as glass, sinks, sanitary appliances, etc.
• Theft: key and lock replacement services, replacement of personal belongings or stolen cash, renewal of documents, etc.
• Employee accidents: covers compensation and medical assistance in the event of death or disability of community personnel.

More extra coverage

• Uninhabitability: in the event that the building suffers some type of damage that prevents residents from living in their homes, this coverage is responsible for covering the costs of temporary accommodation while the necessary repairs are carried out.
• Civil liability of directors and administrators: if a member of the board of directors or the building administrator causes any damage to third parties in the exercise of their duties, this coverage is responsible for the payment of compensation.
• Theft of common property: in addition to theft coverage for neighbors' property, some policies also include protection of the community's common property, such as air conditioning equipment, security systems, electrical installations, etc. .
• Water damage: although some insurance policies include water damage in the fire coverage, in other cases it is an independent coverage that covers damage caused by burst pipes, water leaks, floods, etc.
• Atmospheric phenomena: this coverage is responsible for covering damage that the building may suffer as a result of adverse weather phenomena, such as strong winds, hail, snow, etc.
• Community civil liability: although most insurance includes civil liability coverage, it is also common to find additional coverage specific to the community of neighbors in case there is some type of accident or incident that involves the community itself such as entity.

It is important to note that not all community insurance policies include the same coverage, so it is essential to carefully read the policy conditions to know exactly what is covered and what is not.

Exclusions in community insurance: when insurance does not take care

Each company has its coverage and exclusions, although the most common thing is that they all agree on not being responsible for damages in certain circumstances:

• When the damage has been caused on purpose.
• In accidents caused by some natural phenomena, such as earthquakes or hurricanes.
• Due to defects in the construction of the building.
• In cases where maintenance has been deficient or absent.

The importance of the continent's capital being well adjusted

When the policy is formalized, the real value of the building must be entered so that, in the event of an accident, the insurance completely covers the cost of repair.

The fact of insuring an asset by stating that its value is lower than its real value is known as underinsurance.

The value must also be updated over the years so that it always corresponds to reality.

How to choose the best insurance for the community of neighbors?

1. Carry out an exhaustive study, appropriate to each community of owners, taking into account its specific characteristics (age of the building, type of construction, community services, surface area, annexes, etc.).
2. Avoid underinsurance by establishing correct values, from an insurance point of view, in the container and the content.
3. Review the coverage and exclusions to be very clear about what community insurance covers and what may be rejected in the event of an accident.
4. Have the help of specialists such as property managers to facilitate community decisions.

Frequently Asked Questions

1 Why is it convenient to take out insurance for communities?

Community insurance provides protection to the building where you reside against various potential risks (fire, theft, damage, among others) and also prevents conflicts between owners. For example, in the event of a fire, the absence of additional financial outlays is facilitated.

2 What guarantees does community insurance offer?

Community insurance is a multi-risk policy that covers numerous basic coverages (fire, explosion and lightning strike, smoke damage, electrical damage, vehicle collision and aircraft crash, acts of vandalism, rescue expenses, demolition and debris removal, loss of income, uninhabitability, among others). Additionally, it includes optional warranties such as theft, water damage and pest control, etc.

3 What types of communities can be insured?

We provide solutions and insurance for a wide variety of communities: residential buildings, premises and garages; office buildings, single-family home developments, etc.

4 How is the insured value of a community determined?

Our team will provide you with advice at all times. Accurately calculating the insured value is essential to obtaining adequate insurance. Usually, the evaluation is based on official information from the Cadastre about the built surface of the building. Using this data, along with the building type and location, we can establish a rebuild value.

5 What is meant by content in community insurance?

The content refers to the furniture and personal objects belonging to the community of owners, located in the common areas of the building and that do not have a private nature.