When we talk about insuring a condominium, we are really talking about a community's contract: the building – as the community of co-owners – takes out insurance on the property everyone shares. This is the kind of policy that is typically decided not by one person but by a general meeting – and that is exactly what makes it a special genre. This article lays the foundations: what it is, who and what it covers, and how it fits alongside the residents' own policies.
- Condominium insurance is building and liability cover taken out on the commonly owned parts of the building – the policyholder is the condominium itself.
- The policy is typically administered by the property manager (common representative) or the management company, while the general meeting decides on taking it out or grants a mandate to do so.
- The private property inside the flats and their contents are protected not by this policy but by the residents' own home insurance – the two complement each other.
What exactly is it?
Condominium insurance is property and liability insurance in one. The property side protects the commonly owned elements of the building from the financial consequences of major losses – fire, storm, water damage and their peers. The liability side is there for the case when the building causes damage to someone: a resident, a visitor or a passer-by. The exact range of covers differs from insurer to insurer and from package to package – you will find the overview on the Covers page, and the deeper detail in the individual cover articles.
Who is the policyholder – and who decides?
The policyholder is the condominium itself: the contract is in the building's name, the premium is typically paid from the common charges, and the benefit belongs to the community. In practice the policy is administered by the property manager or the management company – they keep in touch with the insurer, they report claims under the building's policy, and they prepare the decisions. The decision itself – taking out cover, switching, extending it – is typically a matter for the general meeting, or is made on the basis of a mandate set out in the organisational and operational rules (SZMSZ); the exact framework is given in every building by its own founding documents. More on this: the SZMSZ and insurance.
What it rests on: common property
The backbone of condominium insurance is the concept of common property. The roof, the façade, the stairwell, the foundations and the load-bearing walls, the main pipe runs and the common areas are typically common – but the exact line is set for each building by its deed of foundation, and it can differ from building to building. This is not legal hair-splitting but the key question in claims settlement: it decides whether the building's policy or the resident's policy responds to a given loss. There is a separate article on the boundary: common or private property – where the line runs.
And the residents' own policies?
Condominium insurance does not make home insurance unnecessary – and the reverse is just as true. The building's policy protects the shared property; the private property inside a flat and its contents – furniture, appliances, personal belongings – are a matter for the resident's own home insurance. The relationship between the two layers is set out in the home insurance and condominium insurance article; for more on insuring flats, see lakas.biz (in Hungarian).
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