Boards are generally not obligated by a co-op or condominium’s operative documents to purchase liability or casualty insurance covering those portions of the building which are owned by the entity. However, prudent boards should do so, as well as require that apartment owners obtain liability insurance to cover damage to the building or other apartments emanating from the owner’s apartment, which may require an amendment to the co-op’s proprietary lease or the condominium’s bylaws. When apartment alterations are performed, as a board condition for consent the owner is typically required to indemnify the entity and obtain insurance from its contractors to protect the building and other apartments from damage that may result from the alteration work.
One of the complex insurance issues faced by boards and managers is whether a so-called “waiver of subrogation” provision should be required by the building’s proprietary lease or bylaws and in insurance policies. This column explains subrogation and the waiver of subrogation and discusses policy considerations in determining whether a waiver of subrogation is appropriate in co-op and condominium shared housing communities. This column also analyzes case law regarding enforceability of a subrogation waiver and makes recommendations to boards, their counsel and managers regarding such waivers.
