We own a condo unit in a small building of 8 units. There is an HOA. The HOA carries a commercial insurance policy for the building. The individual homeowner then buys their own insurance to cover stuff inside their own units. My understanding is if there is a fire, and the fire damages the building, the structure would be covered by the commercial policy issued to the HOA, but if the fire also damaged furniture in unit #6, then it will be up to whatever insurance the owner of unit #6 John Smith covered.

So one of the units is being sold right now and the mortgage company of the buyer is requiring equipment breakdown endorsement coverage to be included in the current HOA commercial policy. I don't know if this is typical but that's what is required for the loan to be approved and so we (HOA) has reached out to the insurance agent to ask what would be the cost to add this coverage and not even sure how this is typically addressed when an additional coverage is required by the lender of a potential buyer of one of the units.

So I googled equipment breakdown endorsement and it seems to suggest this is to protect the equipment such as appliances or computer of the business (in this case the HOA) in case something happens like a fire or power surge. Since it specifically stated "business" and we have a commerical policy for the building, then I assume, this means only "business owned equipment" right? That would be equipment that the HOA owns, such as the shared washers & dryers, the security lights, may be the electrical panel of the building correct? Does it extends to the equipment of the individual units such as say a power surge and it damages the HOA washer and dryer, but it also damaged unit #4's air conditioning unit and their refrigerator, I assume the individual unit equipment won't be covered or would it? There are nine electric meters and disconnects in the electrical room, one for "common" (HOA) and the other eight for each unit, so in this context, the equipment breakdown endorsement will cover the common disconnect but not the other 8? Or am I totally confused?

Fort Lauderdale, Florida

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