Insuring Condominiums
A Guide for Developers and Personal Buyers

If you are reading this publication there is a strong chance that you may be investigating the benefits of establishing a Condominium on one of our beaches, or, perhaps you have succumbed to the temptation to purchase a unit in an existing development.

Our guide therefore, is aimed both at property developers establishing new projects and also at individual purchasers of units within new and existing developments. But remember, it’s a guide only and you will need to discuss your specific Insurance Requirements with us.

Sea View Developments Ltd is planning a $15M project on Grace Bay Beach. Land has been procured, plans have been approved, and contractors are submitting their bids.

Prior to appointing contractors, Sea View should consider the costs of the following contract covers which are normally taken out in the joint names of the Contractor and Principal; this feature is important as Sea View’s interests must be protected as well as their Contractor’s. It is important also that the covers are incepted prior to work commencing and that they run for the full period of the contract until the site is handed over.

The Contract Covers, which may be written under one Policy, are:
Contractors All Risks Cover to insure against loss or damage to materials on site and work in progress. Sea View will add to the contract value, any materials or fittings which they have purchased for the contract.

Public Liability Insurance to protect the Contractor and Developer against any claim made against them for death, injury or property damage suffered by any member of the public arising from the contract. Their premium will be consistent with the level of indemnity they choose. Most contracts of this size would establish a level of cover ranging between $1-2,000,000.00.

Employers Liability Insurance which will respond in the event that claims are made by workers for death or injury under circumstances where the Contractor or Principals could be held legally liable. Levels of cover are usually consistent with the levels chosen for Public Liability or, sometimes a little lower.

On taking possession of the completed project, and having applied for registration under the Strata Titles Act, Sea View Developments will need to consider a number of covers to cater for their expanded exposure. The buildings, structures and contents of common parts will be covered under a Commercial All Risks Policy. This policy will include:

Fire and a full range of Perils; including Hurricane Damage to Buildings, Swimming Pools and other common areas, Walls and Pathways, Tennis Courts, paved areas and the like. It is now extremely difficult to obtain cover for landscaping. This section of the policy will also cover contents of the Developer, Strata Company and Management Company, but not those contents owned by individual purchasers.

The Sum Insured should represent the full reinstatement value of the property with adequate consideration for removal of debris and architects and surveyors fees.

In addition the following policies should be considered:
Business Interruption. Sea View Developments established a separate Management Company to manage the property for a fee. In the event of serious damage to the property, their income may be compromised. They can cover that risk under a Business Interruption policy.

The Officers of the company are concerned about their exposure to claims made against them by individual owners, their guests and members of the public entering the premises. They know that accidents can happen! Public Liability Cover is normally taken out by Condominiums here for levels varying from $1M- $5M. The policy must cover all services provided by the development including gyms, restaurants and other concessions. It’s important that full disclosure of all activities be made. The basic cover is restricted to claims brought within the courts of the Turks and Caicos Islands; Worldwide Jurisdiction cover is available, but for a much higher cost. The Officers of the company will discuss this matter to determine which cover is most suitable for them.

To protect themselves against claims made by staff and workers for death or injury, the company will incept Employers Liability Cover; they have decided on a limit of $1M which is fairly consistent with the normal limits underwritten on island.

As the Management Company handles a certain amount of cash, they have decided to cover their Money exposure under for a small additional premium.

The Directors of the Management s Company may consider taking out Professional Indemnity Insurance to protect the company against claims made against them for Errors and Omissions, while appointed Officers of the Owners Committee may consider Directors and Officers Insurance to protect their personal exposure.

Phil and Janet Gray have bought one of the units established by Sea View Developments together with their furniture package. They quickly discover that Sea View has an arrangement with their Insurance Agents which offers them a Household Comprehensive Policy which will allow them to adequately cover:

  • Their Furniture and Personal Effects.
  • Their Loss of Rent or alternative accommodation in the event that their unit becomes uninhabitable because of an insured event.
  • Their Money and Credit Cards.
  • Their Personal Liability as individual owners of the unit.
  • Their Liability to their own household staff.
  • The option to cover valuables and jewellery away from the premises.

There are a number of Insurance Companies and Agencies operating in the Turks and Caicos Islands. The Insurance Centre utilizes Companies rated by AM Best to determine their security status. Ask questions, and be sure that you feel comfortable with the knowledge and competence of your consultant.

It’s always better to take the time to establish the perimeters of your Insurance Program before you are faced with a claim.

Tony Lancaster A.C.I.I.
Chartered Insurance Practitioner