Condominium Property Insurance

According to Sec. 12 of the Illinois Condominium Act ("ICA"), the property insurance policy for the association must cover the structural elements of the building including the following:

  1. Interior and exterior walls, foundation and roof
  2. Common areas of the building such as the lobby and hallways
  3. Unfinished interior surfaces of the perimeter walls, floors, and ceilings of the individual units
  4. Certain fixtures in the individual units initially installed by the developer

However this condominium property policy does not cover "improvements and betterments" defined as "all decorating, fixtures, and furnishings installed or added to and located within the boundaries of the unit, including electrical fixtures, appliances, air conditioning and heating equipment, water heaters, or built-in cabinets installed by unit owners." [ICA- Sec. 12(b)].

As an example, if a fire were to destroy the condominium building, the association policy would insure the individual unit to the bare walls only. Therefore the association's insurer would pay to rebuild the individual unit to the point of bare floors and one coat of primer on the walls. If the unit owner can establish that certain fixtures were installed by the developer, the cost of those fixtures would be covered under the association policy as well. Otherwise, the unit owner must look to his or her own individual condominium insurance.

Also note that the association policy must also insure the "limited common elements." The limited common elements are the part of the common elements that are set aside and allocated for the restricted use of a single unit, e.g., porch, window, plumbing pipes, etc. Although covered for insurance purposes, the unit owners are often financially obligated to maintain the limited common elements.