Joining your building’s board comes with a crash course in budgets, maintenance—and yes, insurance. It might not be the first thing you were excited to tackle, but understanding your building’s coverage is one of the most important ways you can protect your community.
If insurance terms feel like a foreign language, you’re not alone. This guide breaks down the essentials—so you can feel more confident making decisions that impact everyone in the building.
Why insurance matters
The building’s master insurance policy does more than check a compliance box. It protects your property, your neighbors, and you—especially if you serve on the board.
When coverage isn’t properly maintained or understood, it can lead to:
- Costly gaps that leave the building paying out of pocket
- Confusion or tension around what’s covered (and what’s not)
- Delays in sales or refinancing if buyers hit issues with lender requirements
- Personal liability for board members if D&O coverage lapses
In short: getting insurance right is one of the smartest things a board can do.
If you’re staring down your first renewal and don’t know where to start, this guide to key insurance terms and timelines breaks it all down in plain English.
What the board handles—and what owners handle
Every building is unique, but most follow this general split:
The board is responsible for:
- Maintaining a master policy that covers the structure and shared spaces
- Making sure liability and D&O coverage are active and adequate
- Reviewing the policy annually and updating it as needed
- Keeping clear records of claims and policy documents
Owners are responsible for:
- Carrying personal unit insurance (commonly called HO-6 policies)
- Covering their own belongings, interior upgrades, and temporary housing if needed
Tip: In smaller or self-managed buildings, boards often get pulled into gray areas when owners aren't clear on their responsibilities. A quick FAQ or reminder email can save everyone time later.
The types of coverage to know
Here’s a breakdown of the most common insurance components you’ll hear about:
- Property insurance: Covers damage to the building itself (from things like fire, storms, or leaks)
- General liability: Covers injury or property damage claims involving common areas
- Directors & Officers (D&O): Protects board members from personal liability tied to board decisions
- Umbrella policy: Provides extra protection beyond standard liability limits
- Workers’ comp: Required if the building employs staff
- Flood insurance: Not included in standard policies—required in FEMA flood zones
- Boiler & machinery: Covers systems like elevators, HVAC, or electrical panels
In condos, ask whether your policy is walls-in (covers some parts of individual units) or walls-out (covers only shared spaces). That one detail can make a big difference in what owners need to insure on their own.
What to review in your policy
You don’t have to read every clause—but there are a few key areas worth understanding:
- Replacement cost vs. actual cash value: Are claims reimbursed based on rebuild cost or depreciation?
- Deductibles: Does the board have enough in reserves to cover a claim if needed?
- Coverage type: Is it named-perils (covers specific risks) or all-risk (broader coverage)?
- Exclusions: What’s not covered, and is a separate rider needed?
- Co-insurance clause: A tricky one—this can trigger penalties if the building is underinsured
Not sure what you’re looking at? That’s where a good broker earns their keep. If your current broker isn’t guiding you through this, here are 5 signs it might be time for a switch.
Smart questions to ask early
Whether you’re on your first board or your fifth, asking the right questions early helps avoid headaches later:
- When does our policy renew?
- Who’s our broker, and how often do we review our coverage?
- What’s our deductible—and do we have reserves to match it?
- Are we current on D&O coverage?
- Have we filed any claims recently?
- Do owners need to show proof of personal insurance?
These aren’t just good governance—they’re smart risk management. And if you're concerned about how your premiums compare, rising insurance costs across NYC are something many boards are grappling with right now.
A note for smaller or self-managed buildings
If you’re managing a 4–12 unit building without full-time management, you might be handling insurance directly. That means:
- Keep documents organized—claims, policies, renewal dates, and broker info
- Build room into your budget for rising premiums or higher deductibles
- Work with a broker who specializes in small buildings—they’ll help you avoid under- or over-insuring
The takeaway
Insurance may not be the most thrilling part of board service, but it’s one of the most impactful. Getting familiar with the basics—plus asking the right questions—helps you make smarter decisions, reduce risk, and protect the people who call your building home.
You don’t have to be an insurance expert. Just a board member who knows enough to ask, review, and document well. That’s more than enough.
