CCS CCS Condominium Insurance & Risk Management 1 — Questions and Answers
Question 1: Which type of condominium insurance policy covers all-in, including unit fixtures and improvements, under one master policy?
- Bare walls-in policy
- Single entity policy
- All-in policy (Correct answer)
- Special form policy
Correct answer: All-in policy
An all-in policy covers the building structure plus all original fixtures, installations, and improvements within individual units under the association's master policy.
Question 2: What does a 'bare walls-in' condominium master policy typically cover?
- Only the common areas and building exterior, not unit interiors (Correct answer)
- All fixtures and appliances inside each unit
- Personal property of unit owners
- Loss of use for all residents
Correct answer: Only the common areas and building exterior, not unit interiors
A bare walls-in policy covers only the building structure and common areas, leaving unit owners responsible for insuring everything inside their unit walls.
Question 3: Which coverage protects a condominium association against lawsuits alleging wrongful acts by board members or officers?
- General liability insurance
- Directors and Officers (D&O) liability insurance (Correct answer)
- Workers' compensation insurance
- Umbrella liability policy
Correct answer: Directors and Officers (D&O) liability insurance
Directors and Officers (D&O) liability insurance protects board members and officers from personal liability arising from decisions made in their official capacity.
Question 4: A condominium association's fidelity bond (crime insurance) primarily protects against:
- Fire damage to common areas
- Fraudulent acts or theft by association employees or board members (Correct answer)
- Slip-and-fall accidents on common property
- Structural defects in the building
Correct answer: Fraudulent acts or theft by association employees or board members
A fidelity bond covers the association's financial losses caused by dishonest or fraudulent acts committed by employees, volunteers, or board members.
Question 5: What is the purpose of loss assessment coverage in a unit owner's HO-6 policy?
- To pay for the owner's personal property losses
- To cover special assessments levied on the owner after a loss the master policy doesn't fully cover (Correct answer)
- To insure structural improvements made by the owner
- To provide liability coverage for guests in the unit
Correct answer: To cover special assessments levied on the owner after a loss the master policy doesn't fully cover
Loss assessment coverage pays the unit owner's share of a special assessment levied by the association when a covered loss exceeds the master policy limits.
Question 6: Which factor most directly influences the replacement cost calculation used to set a condominium building's insured value?
- Current market sale price of units
- Assessed tax value of the property
- Cost per square foot to rebuild the structure to current construction standards (Correct answer)
- Outstanding mortgage balances on all units
Correct answer: Cost per square foot to rebuild the structure to current construction standards
Replacement cost is based on the estimated cost to rebuild the structure at current labor and material prices, which can differ significantly from market value.
CCS CCS Condominium Insurance & Risk Management 1
Which type of condominium insurance policy covers all-in, including unit fixtures and improvements, under one master policy?