The Maryland Insurance Administration published a bulletin on the insurance coverage requirements necessary for detached condominium units and the related council of unit owners. A detached condo unit is a standalone unit that is similar to a single-family home.
The passing of House Bill 1227 from the 2024 Legislative Session changed the requirements for what a council of unit owners must maintain and limited the requirement that unit owners must carry homeowners insurance on their unit. The changes will be effective on October 1, 2024.
Previously, all condo unit owners were required to carry homeowners insurance on the entirety of the unit. Under the new bill, only owners of a detached unit located within a condominium composed entirely of similar detached units must carry homeowners insurance on the entirety of the unit. The council of unit owners can opt to carry that coverage in place of the unit owner, which would satisfy the requirement.
The coverage that the council of unit owners must maintain changes depending on whether the condominium is comprised of attached or detached units, or a mix of both. If the condominium is comprised of attached and detached units, the council is required to carry coverage on the common elements and the units. If the condominium is comprised entirely of similar detached units, the council is only required to carry insurance coverage for the common elements.
The council may opt to carry homeowners insurance for a condominium comprising entirely of detached units, but it is not required and would be at their discretion. If the council does not opt to carry insurance on the units, the unit owners are required to do so.
The council of unit owners is required to give an annual written notice to the owners of residential, detached units that they are required to maintain homeowners insurance on their unit.
For a covered loss to a condominium that contains a mix of attached and detached units, the proceeds first go to repairing or restoring damaged common elements and the damaged units. Unit owners or lien holders are only entitled to payment if there is a surplus after those repairs, or if the condominium is terminated.
The bulletin can be found here.
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