The Maryland Insurance Administration published a Bulletin on September 28, 2023, discussing the changes in House Bill 98 of the 2023 legislative session, which were made effective October 1, 2023. The changes include reducing the coverage that the council of unit owners is required to maintain for residential detached units and requiring that the owners of those units have homeowners insurance on the entire unit.
Prior to the changes, the councils of unit owners were required to maintain comprehensive general liability insurance and property insurance on the common elements of the association, and for all attached and detached condominium units, with the exception of improvements and betterments installed in units by unit owners.
Under the new changes, they will still need to maintain insurance for the common elements and units for attached or multifamily dwelling units. For detached units, which are standalone units that are similar to single-family homes, they will only be required to carry insurance on the common elements. The responsibility to maintain insurance on the unit is transferred to the owner of the unit.
The Administration advises that, contrary to what some producers are saying, the mandated homeowners insurance does not necessarily need to be acquired under a separate policy issued directly to the unit owner. The statute does not prevent the council from voluntarily providing coverage to the owner of a detached unit, if they elect to do so. If the council does purchase a policy that provides coverage, the unit owner is not required to purchase a separate policy.
Insurance producers should confirm whether the council will provide coverage for the detached units, or whether the owner of the unit will need to acquire a separate policy. Unit owners should also be made aware that if the cause of any damage to the condo originates from their unit, they will be responsible to the council for the amount of the deductible under their insurance policy, up to $10,000. The council must alert unit owners of this responsibility and of the amount of the deductible annually.
The Bulletin can be found here.
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