Selling Guide

Published June 3, 2020

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B7-4-01, Liability Insurance Requirements for Project Developments (09/04/2018)

Introduction

This topic contains information on liability insurance, including:

 

Liability Insurance Requirements

Liability insurance is required for certain condo and co-op projects.

The HOA or co-op corporation must maintain a commercial general liability insurance policy for the entire project. The policy must include coverage for:

  • commercial spaces that are owned by the HOA or co-op corporation, even if they are leased to others, and

  • bodily injury and property damage that results from the operation, maintenance, or use of the project’s common areas and elements, and any other areas that are under its supervision.

If the policy does not include severability of interest or separation of insureds in its terms, Fannie Mae requires a specific endorsement to preclude the insurer’s denial of a unit owner’s claim because of negligent acts of the HOA or co-op corporation or of other unit owners.

 

Exceptions to Liability Insurance Requirements

Liability insurance is required for all condo and co-op projects, with the following exceptions:

 

Amount of Coverage

The amount of coverage must be at least $1 million for bodily injury and property damage for any single occurrence.

 

Cancellation/Modification Requirements

The policy must provide at least ten days’ written notice to the HOA, co-op corporation, or insurance trustee before the insurer can cancel the policy.

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