These pages analyze condominium commercial unit owners coverage form CP 00 18, the differences from form CP 00 10, and condominium commercial unit owners optional coverages endorsement CP 04 18. (For a discussion of form CP 00 10, see Building and Personal Property Coverage Form. As with other commercial coverage forms in ISO's commercial property program, the unit owners form is used in conjunction with policy declarations, common policy conditions, commercial property conditions, one of three causes of loss forms, and any other desired endorsements, to produce a monoline property policy. The same forms, along with appropriate declarations, conditions, and coverage for other kinds of property and casualty coverage are added to form a package policy, in any combination desired.

Analysis

There are two principal areas of difference between forms CP 00 18 and CP 00 10. First are the adaptations to the needs of condominium ownership, and second, elimination of building coverage for the unit owner (except for coverage on building fixtures, improvements, and alterations owned by the unit owner). This arrangement recognizes that insurance on the unit owner's building is generally provided by the condominium association rather than the individual unit owner.

Three provisions that relate to the insured's status as condominium unit owner, not found in form CP 00 10, are added to form CP 00 18. First, under covered property, the definition of business personal property includes as item 1.a.(2) “fixtures, improvements, and alterations making up part of the building and owned by you.” The intent is to extend the personal property coverage to any portions of the unit itself that the condominium declarations set out as solely owned by the unit owner, and that are not insured by the association. Portions solely owned by the unit owner but required by the condominium association agreement to be insured by the association, although seemingly included for coverage under item (2)—as they would be under a form HO 00 06 10 00, for example—are excluded by “property not covered” item k., as discussed later.

In cases of “bare walls” ownership by the unit owners in common, the unit owner may be sole owner of and be responsible for insuring the entire interior of the unit inside the unfinished exterior walls, floor, and ceiling of the unit. Unlike the homeowners form HO 00 06 for residential unit owners (which provides a separate item of coverage with only a nominal limit, unless increased), the commercial form extends the personal property item to include this property, and in the process makes the value of this property, along with the unit owner's personal property, subject to the coinsurance provision. It is important in writing property insurance for a commercial unit owner that the unit owner's responsibility for insuring any portion of the building is identified and its value taken into account in fixing the limit of insurance.

The CP 00 18, through use of the CP 19 10 06 95, your business personal property – separation of coverage, allows the insured to schedule contents and stock as separate items.

A second modification in the unit owners form is insertion of item k. in “property not covered.”

Analysis

This excludes from coverage fixtures, improvements, and alterations that are a part of the building (the same property described as insured if owned by the unit owner in personal property item (2)) and appliances “such as those used for refrigerating, ventilating, cooking, dishwashing, laundering, security, or housekeeping,” when the condominium association agreement requires that such property be insured by the association. Note that this provision is an absolute exclusion—unlike the provision of form HO 00 06 where the unit owners coverage is excess over the association coverage in the same situation—and it applies even when the association insurance is not properly written and does not, in fact, provide the coverage required by the agreement.

The newest form has increased dollar limits for two of the coverage extensions. While the prior form allowed $1,000 at each described premises for valuable papers and records—cost of research, the current form allows $2,500. The current limit for property off premises is $10,000; the prior form allowed $5,000.

The CP 00 18 also adds the new coverage extension for “non-owned detached trailers.” For a discussion of this coverage,  see Building and Personal Property Coverage Form.

Note also that the CP 00 18 omits references to building, not only in the coverage extensions, but in the valuation clause as well. One effect of this omission is to make the fixtures, improvements, and alterations coverage apply to real property items not usually covered by building insurance—costs of excavation, underground foundations, flues, pipes and drains, piers or wharves, etc., if a part of the building. The value of all such property owned by the unit owner (and not required under the association agreement to be insured by the association) is subject to the coinsurance clause, if it applies.

Analysis

The third difference between form CP 00 18 and CP 00 10 is insertion of loss condition three, condominium association insurance. This clause provides that when the condominium association has insurance covering the same property covered by the unit owner's policy, the unit owner's insurance is excess over and not contributory with the association insurance. This provision seems to conflict with property not covered item k., discussed in a preceding paragraph. The only kind of property to which condition three could apply, in light of item k., is property the association is not required to insure by the association agreement, but which is nonetheless also insured by the association. Presumably, if the association agreement is silent as to insurance, and the requirement to insure is found in the bylaws or by action of the condominium unit owners, officers, or board of directors, then condition three rather than item k. applies.

The prior form limited coverage if “the unit where loss or damage occurs has been vacant for more that 60 consecutive days.” The current language is the same as the building and personal property coverage form, CP 00 10. For a discussion of the clause, see Building and Personal Property Coverage Form. The current language distinguishes what “vacant” means when the insured is a tenant or is the owner of a building. The use of the word “tenant” to apply to a unit owner should not present problems in event of a covered loss.

The clause operates to deny coverage on all covered property after sixty consecutive days of vacancy for loss by vandalism, sprinkler leakage due to freezing, building glass breakage, water damage, theft, or attempted theft, and reduces recovery for loss by any other peril by 15 percent.

Endorsement form CP 04 18 is available for use by commercial unit owners to add loss assessment coverage or miscellaneous real property coverage or both to the condominium commercial unit owners coverage.

Item A. of endorsement CP 04 18, the loss assessment coverage, is limited to liability for assessments charged to all unit owners arising out of insufficiency of the association's property insurance, and only from causes of loss covered by the unit owner's property insurance. The loss must be to property in which each unit owner has an undivided ownership interest, and the assessment must be made within the policy period shown in the unit owners declarations. Condominium ownership typically includes an undivided fractional interest in common areas as well as ownership of the unit itself, so coverage would apply in the case of assessments pertaining to common areas.

The loss assessment coverage can be purchased with a limit of $1,000 or multiples of $1,000, but there is a fixed $1,000 limit per unit on liability for assessments resulting from a deductible in the association's coverage. This coverage has a $250 deductible for each unit insured per occurrence. (A unit owner may own and insure more than one unit; the deductible applies separately to each).

Endorsement CP 04 18 may also be used to insure miscellaneous real property.

Item B. of endorsement CP 04 18 covers “miscellaneous real property” subject to a separate limit of insurance. This coverage is intended to insure real property items other than the “fixtures, improvements, and alterations making up part of the building and owned by (the unit owner)” that are covered as a part of the personal property. It also provides excess coverage on miscellaneous real property items pertaining to the unit when these items are insured by the condominium association.

Miscellaneous real property is defined as meaning “condominium property that: a. is not included under Your Business Personal Property; and b. (1) pertains to your condominium unit only; or (2) you have a duty to insure according to the condominium association agreement.” Examples of the kinds of property for which this coverage can be used include structures in an outside area of the unit, or even in a common area if owned by the unit owner and used exclusively for that unit.

The real property items listed as property not covered in form CP 00 10 (building and personal property) are not excluded from coverage in the miscellaneous real property coverage. Thus, there is coverage for any real property items that pertain to the unit—including those items customarily excluded from building coverage, as discussed earlier.