When it comes to managing property portfolios, J. Krug specializes in helping condo associations in Illinois (IL) secure the necessary insurance to protect all stakeholders. Ensuring compliance with IL insurance requirements is crucial. Property insurance must cover common areas and units, including full replacement costs and adherence to building codes. General liability insurance should provide a minimum of $1,000,000 in coverage for the association and its members. For associations with six or more units, fidelity bonds and directors and officers liability coverage are essential. Additional policies, such as workers’ compensation and environmental hazard insurance, may also be required. All unit owners and secured parties are insured under the association’s policy, which serves as primary coverage. By partnering with J. Krug, condo associations can ensure they have comprehensive protection and coordinated management of any losses. Here is our high level coverage recommendation checklist.

Property Insurance:

• Common elements and units
• Special form causes of loss
• Coverage in an amount equal to the full insurable replacement cost of the insured property, less deductibles
• Coverage for rebuilding the insured property in compliance with building code requirements after an insured loss (Coverage B, demolition costs; Coverage C, increased cost of construction coverage)
• The combined total of Coverage B and Coverage C must be at least 10% of each insured building value or $500,000, whichever is less

General Liability Insurance:

• Coverage in the amount of $1,000,000 or more, depending on the judgment of the board
• Policy language needs to include the board, association, management agent, and their employees and agents as insured parties
• Must cover claims against one or more insured parties by other insured parties

Fidelity Bond and Directors and Officers Coverage:

• Associations with 6 or more dwelling units must obtain a fidelity bond covering persons who control or disburse funds of the association
• Associations must obtain directors and officers liability coverage at a level deemed reasonable by the board

Other Coverages:

• Condominium associations may carry additional insurance coverages such as workers’ compensation, employment practices, environmental hazards, and equipment breakdown insurance
• Insured Parties and Waiver of Subrogation:
• Each unit owner and secured party is an insured person under the policy
• The insurer waives its right to subrogation against unit owners, the association, and board members
• Unit owners waive their right to subrogation against the association and board members

Primary Insurance:

• If there is other insurance in the name of a unit owner covering the same property, the association’s policy is primary insurance
• Adjustment of Losses and Distribution of Proceeds:
• Any loss covered by the property policy must be adjusted by and with the association
• Insurance proceeds must be paid to the association or an insurance trustee designated by the association
• The insurance trustee or association must hold proceeds in trust for unit owners and secured parties as their interests may appear

Mandatory Unit Owner Coverage:

• Condominium unit owners may be required to obtain insurance covering their personal liability and compensatory damages to another unit caused by their negligence or that of their guests, residents, or invitees.