Insight On Renting Your Condominium Unit

By Laurie Infantino, I sign nothing, at least that's my reputation.

 
What is closer to the truth is that I sign "nothing" without first reading it, understanding it, and accepting the terms of what I am being asked to sign.  That is not the case with most people, which surprises me.

My husband and I own a condominium unit in Steamboat Springs, Colorado.  We are part of a condominium association, have reviewed the CC & Rs and both the association and we carry the appropriate insurance coverage.  So far so good?.  Here is where everything goes array. The condominium association contracts with a management company to manage the property.  In addition, each unit owner who has their unit in the rental pool, individually contracts with the management company to rent their unit.

All of that being said, what would then be appropriate in terms of the contract between the unit owner and the management company? In my opinion it is the unit owners who should require the management company to minimally provide evidence that they carry Liability Insurance; Business Auto Insurance for the shuttles they operate on the unit owners' behalf; and statutory Workers Compensation.  Additionally, it would appear appropriate that the unit owners would require of the management company a hold harmless and indemnification clause on behalf of the unit owner and be named as an additional insured on the management company's policy. That would be appropriate.

But that is not the way it works, much to my surprise.  If you actually read the management agreements, it is the management company that requires the unit owner to name them as additional insured on the unit owners' Liability Policy; provide them with a hold harmless and indemnification clause.  It gets worse, the contract requires that the owner shall carry liability and property insurance on the unit as well as coverage on their personal property and contents in the Unit in such amounts and of such types as the manager shall reasonably deem sufficient to protect the interests of both parties.  All such policies shall be so written as to protect Manager in the same manner and to the same extent as such policies protect Owner.

So what that means, in simple terms, is that the manager is dictating to the unit owner the type of insurance they are to carry (even on their personal property); telling them how much coverage to carry; and requiring that the property and liability policy protect them to the same extent it protects us. That is not even within the realm of possibility, especially from the aspect of the property insurance contract under which they have absolutely no insurable interest.
   
I asked our own insurance agent, one of the brightest personal lines professionals I have known, if she is familiar with these types of requirements.  Her answer was yes, she is often asked to provide additional insured status, hold harmless and indemnification clauses on behalf of management companies.  She went on to say, her insurance companies won't do it and rightfully so.  So, that leaves us, the unit owners, holding the bag. Sign it and pay the piper because our personal insurance sure will not provide protection for these outrageous requirements.
 
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