Don't Fall Into Condo Chaos
Real Estate Business Insurance and the New Illinois Condominium Property Act
A recent legislative change, Public Act 98-1068, amends the Illinois Condominium Property Act, creating insurance changes that were effective June 1, 2015. This Condo Act provides that any provision in a condominium is void against public policy and ineffective if it limits or restricts the rights of the board of managers. That’s a mouthful. So what does this mean to you? Two mandatory changes will impact your Directors and Officers coverage and Ordinance or Law coverage.
The first change involves replacement cost and a required increase to ordinance or law coverage:
Property insurance must now provide coverage "in a total amount of not less than the full insurable replacement costs of the insured property, less deductibles, but including coverage sufficient to rebuild the insured property in compliance with building code requirements subsequent to an insured loss, including: Coverage B, demolition costs; and Coverage C, increased costs of construction coverage."
According to the Condo Act, the combined total of Coverage B and Coverage C shall be no less than 10% of each insured building value, or $500,000, whichever is less.
In addition to the ordinance or law B&C coverage requirements, the Condo Act establishes new requirements as it relates to Directors and Officers coverage:
Coverage must now include past, present and future board members while acting in their capacity as members of the board of directors, the managing agent, employees of the board of directors and managing agent. Directors and Officers coverage must also provide defense coverage for non-monetary claims (lawsuits seeking injunction or declaratory judgment), defense of contractual liability and defense as it relates to placement or adequacy of insurance.
As a property manager or owner, we encourage you to familiarize yourself with the new Illinois Condominium Property Act. But as always, the ‘A’ Team is here to help ensure your business is covered. Contact us at any time for clarification of these changes.
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