B7-4-01, General Liability Insurance Requirements for Project Developments (12/14/2022)

General liability insurance is required for all condo and co-op projects, with the following exceptions:

• projects that qualify for a waiver of project review as described in  B4-2.1-02, Waiver of Project ReviewB4-2.1-02, Waiver of Project Review, or
• condo projects reviewed under the Limited Review method as described in  B4-2.2-01, Limited Review ProcessB4-2.2-01, Limited Review Process.

When required, the HOA or co-op corporation must maintain a general liability insurance policy for the entire project. The general liability insurance policy must include coverage for:

• commercial spaces that are owned by the HOA or co-op corporation, even if they are leased to others, and
• bodily injury and property damage that results from the operation, maintenance, or the use of the project's common elements, and any other areas that are under its supervision.

The general liability insurance policy must include a separation of insureds or severability of interests provision in its terms. If the policy does not include separation of insureds or severability of interests in its terms, Fannie Mae requires a specific endorsement to preclude the insurer's denial of a unit owner's claim because of negligent acts of the HOA or co-op corporation or of other unit owners.

The amount of coverage must be at least $1 million for bodily injury and property damage for any single occurrence.

The general liability insurance policy must designate the HOA or co-op corporation as the named insured with the premiums paid as a common expense by the HOA or co-op corporation.