In most buildings the premium for condominium insurance “lives” inside the common charges – which is exactly why it becomes invisible: it melts into the residents' monthly payments, and in the manager's books it is one line among many. Yet keeping premium payments in order is a matter of life and death for the cover: insurance that is not paid for sooner or later stops being insurance. Let us look at the good practices.
- The insurance premium is typically part of the common charges; it can be paid annually, half-yearly or quarterly, as the contract provides.
- Falling behind with the premium can result in the loss of cover: under Section 6:449 of the Civil Code, the insurer must give the policyholder written notice, warning of the consequences and setting an additional deadline of 30 days from the date the notice is sent (the policy conditions may allow a longer grace period); once that deadline passes without payment, the contract terminates – with retroactive effect to the due date – unless the insurer enforces its premium claim in court without delay.
- Transparency – what the policy covers, how much the burden is per flat – is the basis of residents' trust and of smooth decisions at the general meeting.
Scheduling: in the rhythm of the renewal date
The frequency of payment is set by the contract – annual, half-yearly and quarterly schedules are the typical ones. Annual payment is the simplest in administrative terms, but it is a bigger single item for the kitty; more frequent instalments fit more smoothly into the logic of the monthly common charges. The right choice depends on the building's cash flow – the point is that the due date should be in the manager's calendar rather than arriving as a surprise. The renewal date is also the natural moment for a review: the renewal routine.
The risk of falling behind
An insurance premium is not a “flexible” bill: under the grace-period rules in the policy terms, a lasting failure to pay can lead to the end of the insurer's cover – meaning the building can be left without protection while the residents notice nothing at all. When the managing agent or the property manager changes, this is a classic stumbling point: in the confusion of the handover, the premium due date gets lost. That is why the premium status also appears on the handover list for a change of manager. And if the building's finances are temporarily tight, the right route is not quiet non-payment but a conversation – about the schedule, and possibly about reshaping the cover.
Transparency towards the residents
Insurance is one of those items in the common charges where transparency pays off many times over. If residents know what the policy covers and roughly what it costs per flat, insurance is not “another levy” but an understandable service – and the next decision at the general meeting will go more smoothly too. There are two ready-made tools for this: the owner information template and the insurance item of the annual report.
Reserve and deductible: the premium's siblings
Alongside the premium, two related items deserve a place in the building's financial plan. The deductible reserve: when a claim comes, the deductible is the building's own – and it is better not to have to collect it through a special levy; the level can be planned together with the deductible decision. And the prevention budget: money spent on maintenance comes back in the claims statistics and, over the longer term, in the premium too. This is how insurance becomes a system: premium plus reserve plus prevention – all three serving the community's peace of mind.
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