Legislation enacted during the 2020 session of the Maryland General Assembly increases the amount for which an individual unit owner is responsible where the cause of damage to any portion of the condominium originates in their unit. Under Section 11-114 of the Maryland Condominium Act, condominium master policies must cover property damage to all of the condominium structure, including both the common elements and units as originally constructed and finished by the developer, with the unit owners providing individual insurance for their improvements and personal contents. If damage originates in an individual unit, the owner is responsible for the insurance deductible under the condominium’s master policy, up to a maximum cap, which has been set a $5,000. The new law increases that cap to $10,000, and will take effect on October 1, 2020. The statute will now provide: “If the cause of any damage to or destruction of any portion of the condominium originates from a unit, the owner of the unit where the cause of the damage or destruction originated is responsible for the council of unit owners’ property insurance deductible not to exceed $10,000.” Any remaining deductible amount remains a common expense.
Proposed Legislation Would Increase a Unit Owner’s Responsibility For The Condominium’s Insurance Deductible From $5,000 To $10,000
Legislation now pending in the Maryland General Assembly would double unit owner responsibility for the condominium’s insurance deductible when damage to components of the condominium originates from a unit. Under current law as established in Section 11-114 of the Maryland Condominium Act, the council of unit owners is required to maintain insurance “[f]or property and casualty losses to the common elements and units, exclusive of improvements and betterments installed in the units by the unit owners other than the developer.” An individual owner in whose unit the damage originates is responsible for the condominium’s insurance deductible up to a maximum of $5,000. Otherwise, the deductible remains a common expense. The result is that condominium master policies must cover property damage to all of the condominium structure, including both the common elements and units as originally constructed and finished by the developer, with the unit owners providing individual insurance for their improvements and personal contents. If damage originates in the unit, the owner is responsible for the insurance deductible up to a maximum of $5,000. Under House Bill 108 and Senate Bill 175, the $5,000 limit on unit owner responsibility would be raised to $10,000.
Another bill effecting condominiums and homeowners association that failed to pass during the 2012 session of the Maryland General Assembly related to insurance coverage for property management companies. House Bill 741 would have required management companies, employed by condominiums, homeowners associations or housing cooperatives, to purchase fidelity insurance that would indemnify the assoication from an act or omission arising from fraud, dishonesty or criminal acts by an agent of employee of the mangagement company. The proposed law received an umfavorable report from the Environmental Matters Committee, and never came to a vote.