ARTICLE: Apartment Building Communal Insurance Explained.
It is a legal requirement for the Apartment Building Management Committee to organise a suitable communal insurance policy including at a minimum fire, lightning and earthquake at a suitable level to cover the estimated rebuild costs of the jointly owned building.
While there is no legal requirement under the Communal property regulations (Immovable Property Act Section 38) for public liability insurance, this is strongly advised. A communal building is a high-risk area, with items like lifts, pools and car parks which all pose a high potential risk of accident/injury to a vendor or the public.
REMINDER: Under the Communal Regulations, taking out communal insurance for the building including anything more than the default Fire, Lightning & Earthquake coverage requires a vote of approval by 50% of ALL owners (not just those present at the general meeting).
Individual Units Insurance
Some apartment buildings will decide to take out a policy which includes cover for the individual units (Such as coverage for flood, water damage, theft, public liability, contents etc).
A units share of a Group Policy will likely be lower in cost than if they contract their own insurance, and you have the benefit of a single insurer being responsible for all areas of the building which reduces the chances of complicated claims where two insurers are trying to assign liability to each other.
However you may find unit owners object to not being given the option to select their own policy and level coverage, or paying for a policy that also covers unsold units or worse non-paying units. The pro's and con's of this option should be discussed with owners at a general meeting.
If owners wish to proceed with taking out this additional insurance coverage it will require a majority vote at a least 50% of ALL owners (not just those present at the general meeting). On a successful vote, this is then binding to All unit owners.
Committee Liability Insurance
In addition to public liability insurance, I strongly suggest that every building takes out a policy to cover the liability of the individual members of the committee. You will need to ask specifically for this as its not usually included in most default insurance policies.
It’s important to note this is different from liability insurance which covers the building against claims from third parties, this is additional coverage for legal expenses or compensation awards against the committee for any claim by a PROPERTY OWNER or public authority.
Make 100% sure that your insurance agent knows exactly what you are asking for, as this is something that they may not be fully familiar with.
I recently published an articles specifically on the subject of Committee Liability insurance which you can read here: Committee Liability Insurance
Looking for more?
If you are a member of your management committee, (or are looking to set one up) you will know that while the communal property regulations are comprehensive, they are sometimes a little difficult to understand and even once understood its not always easy to apply these generic regulations to your individual building with its specific challenges.
To help with this problem my most recent book the Ultimate Committee handbook gives you detailed and step by step instructions on every aspect of being on your committee and running your building. It explains the communal property law in simple terms including real world examples and instructions on how to best apply these regulations.
To get more information on this book, and view a book preview you can click the below link.
Unlock the true potential of your apartment building or resort with The Ultimate Committee Handbook.
The Cyprus Communal Guide
Helping you unlock your buildings true potential.