Maryland law requires insurance for many residential condo units

The owner must pay the least of the repair or replacement cost, the council’s property insurance deductible, or $25,000 when damage starts in that owner’s unit. This applies when damage to any part of the condominium originates from a unit. The council treats the part of its deductible above the owner’s responsibility as a common expense.

An owner must keep a condominium unit owner policy or a substantially similar property insurance policy on the unit. This applies only if every unit in the condominium is intended for residential use. It does not apply to detached units in a condominium made up entirely of similar detached units. The policy must cover the council’s property insurance deductible or part of it, personal belongings, at least 12 months of alternate housing if the owner cannot live in the unit, personal liability of at least $500,000, and loss assessments of at least $25,000. Building coverage must be at least $25,000 or enough to repair or replace covered owner improvements and upgrades, whichever is greater. Condominium bylaws may not require coverage amounts above these requirements.

A council must give owners yearly written notice of their responsibilities for unit-originated damage and the amount of its property insurance deductible. An owner must provide proof of required insurance yearly and when asked; if the owner lacks coverage, the council may buy a policy and charge the premium to that owner. The notice and insurance requirements concern owners’ duties in residential condominiums covered by the unit insurance rule. If the council buys a policy for an owner, the insurer must pay the council the part of its deductible for which that owner is responsible. A lack of required insurance does not remove the owner’s responsibility for damage that starts in the owner’s unit.