Condo Association Insurance Cost?

Question

Hello! We recently went into contract to purchase a 2-unit multi-family property in Savannah, GA. The property was in contract 3 times prior but fell out because of financing due to the structure of the ownership. Basically it's set up as 2 condos instead of a multi-family so no one could get a mortgage to purchase the whole thing.

We were able to come in with a substantially lower bid since we can pay cash. My original thought was to keep it as a condo for now because that left us with the option of selling just one of the units if we ever decided we wanted to, but then if we decided we wanted to mortgage it or sell the whole thing, we would convert it to multi-family.

The issue that has popped up is that when speaking to an insurance agent, he mentioned that we would need separate insurance policies for each of the units (which is not a big deal) but then an additional policy for the Condo Association.

Has anyone had experience with buying Condo Association insurance? Obviously this is just for two units in one home, and I'm sure most Condo Association insurance is designed for larger more corporate entities. Could anyone give me a sense of cost? Understand it will vary, but I'm just trying to think through considerations...

Meghan Danaher · Answer

@John Mocker Thank you so much for the insight!! I may hit you up for more info if I don't get what I need from the agents in Georgia I've been speaking to.

John Mocker · Answer

Meghan,

I insure several 2 unit Condo Associations. How you structure the Insurance depends on the physical construction of the buildings. One Association has side by side units with one common wall. That gave us the option of shifting almost all the building coverage to the Unit Owners and minimizing the Condo owned (common elements). There was little savings and it would have required rewriting the association bylaws to accomplish so they did not end up doing it. I mentioned it because if gives you an idea of the flexibility you have as the owner of both units.

Properly done, there should not be duplication of coverage with the exception of Liability. The Condo Association insures the Common elements of the property. The condo unit owner insures their contents and the parts of the building assigned to their unit by the bylaws. The cost of the Condo Association coverage & the Two condo unit policies would probably total more than just a Dwelling Fire policy on a 2 family rental property. I would get it quoted both ways to see the difference. Remember to factor in the costs of dissolving the Association in your decision. Also, you need to see if the individual condos would sell for more than a 2 family house.

Hope this helped and feel free to PM me if you want more info on how the 2 unit associations handled their coverage.

Condo Association Insurance Cost?

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