Maryland: Insurance Administration Urges Review of Condo Coverages in Wake of Court Decision

The Maryland Insurance Administration has issued a bulletin urging insurers, producers, condominium associations, and unit owners to review condominium coverages in place in the wake of a court decision that conflicts with previous legal interpretations and standard industry practices.

In the case of Dianne Anderson v. Council of Unit Owners of The Gables on Tuckerman Condominium, the Maryland Court of Appeals held that the Maryland Condominium Act does not require a condominium association to repair or replace property of an individual condominium unit owner after a casualty loss that results in damage solely to the unit as opposed to damage to the common elements or structure of the condominium.

As a result of the decision, “it is likely that many unit owners are currently underinsured,” according to the Insurance Administration bulletin, while it is also likely that “condominium associations may have purchased more coverage than necessary as the policies were written with the understanding that the condominium association was responsible for losses sustained to the individual units as well as to the common elements and structure.”

Consequently, the bulletin urges producers, insurers, condominium associations, and unit owners to review the coverages they have sold, procured, or purchased in light of the decision. “It is important that all parties understand the risks to which they are exposed to and be offered an opportunity to purchase insurance with adequate limits to protect themselves,” the bulletin states.

Questions should be directed to Associate Commissioner P. Randi Johnson, at (410) 468-2301 or by email at prjohnson@mdinsurance.state.md.us.

Direct questions to NAMIC State Affairs Manager Paul Tetrault.

Posted: Tuesday, July 01, 2008 12:00:00 AM. Modified: Tuesday, July 01, 2008 12:17:00 PM.

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