8202.5: Liability insurance for condominiums (11/19/18)

© Freddie Mac Single-Family Seller Servicer Guide

Liability insurance is required for all Condominium Projects, except the following:

• Condominium Projects reviewed under the streamlined project review type in Section 5701.4
• Mortgages secured by a Detached Condominium Unit that are delivered as the review type Exempt From Review as set forth in Section 5701.7
• Freddie Mac-owned "no cash-out" refinance Condominium Unit Mortgages that meet the requirements in Section 5701.7
• 2- to 4-Unit Condominium Projects
• Freddie Mac Relief Refinance MortgagesSM – Same Servicer and Freddie Mac Relief Refinance MortgagesSM – Open Access and Freddie Mac Enhanced Relief Refinance®Mortgages

The condominium homeowners association must maintain commercial general liability (CGL) insurance covering all common areas, common elements, commercial spaces and public ways in the Condominium Project.

If not already included in the terms of the CGL coverage, there must be a "severability of interest" endorsement precluding the insurer's denial of a unit owner's claim because of negligent acts by the association or other unit owners.

The insurer's limit of liability per occurrence for personal injury, bodily injury or property damage under the terms of the above coverages must be at least $1 million and the coverage must provide for claim settlements on an occurrence basis.