Property Management Insurance Glossary

The terms below appear in declarations, management agreements, statements of value and certificates of insurance. Each is defined in the sense the document is actually using it, with the Texas statute noted where one applies.

This glossary defines only the terms the property management ecosystem owns. Contractual risk-transfer terms — additional insured, certificate of insurance, insured contract, indemnification and hold harmless, primary and noncontributory, subrogation and waiver of subrogation — are defined once, in the general liability glossary, and are not repeated here. So are the core policy mechanics: occurrence, claims-made versus occurrence, retroactive date, self-insured retention and named insured. Social engineering fraud is defined in the cyber liability glossary, and fidelity bond in the surety bonds glossary.

Definitions describe general market usage and Texas law as it stands. Your policy wording, endorsements and governing documents control. Nothing here interprets a specific declaration, contract or policy.

Community association

Master Policy

The insurance program purchased by a community association covering the common elements and, in a condominium with stacked units, the units themselves. It is the association’s policy — not the management company’s and not the unit owner’s. Under Texas Property Code § 82.111 a condominium association’s property insurance must include the units where the building has horizontal boundaries, but need not include improvements and betterments installed by unit owners.

Unit Owner

The individual who owns a unit within a condominium regime. A unit owner is not an insured under the association’s master policy simply by owning a unit; the owner carries a separate policy for personal property, improvements and betterments, personal liability and loss assessment exposure.

Common Elements

The portions of a condominium owned in common by all unit owners rather than by any individual — typically structure, roof, grounds, corridors and shared systems as defined in the declaration. The declaration, not a general rule, determines what is common in a given regime.

Limited Common Elements

Common elements reserved for the exclusive use of one unit or a subset of units, such as an assigned balcony, patio or parking space. Responsibility for maintaining and insuring them is set by the declaration and varies between associations.

Horizontal Boundaries

A condominium building in which units are stacked vertically, so that units share floors and ceilings. The term matters because Texas Property Code § 82.111(b) requires the association’s property insurance to include the units in such a building — a requirement that does not attach the same way where units do not have horizontal boundaries.

Improvements and Betterments

Alterations, fixtures or upgrades installed by a unit owner within a unit. Texas Property Code § 82.111(b) expressly states the association’s required property insurance need not include them. Whether a specific association nevertheless covers them is a declaration and policy question.

Special Assessment

A charge levied by an association on its members outside the regular budget, often after a loss, a shortfall or a capital need. Insurance does not pay a special assessment as such; certain unit-owner policies provide loss assessment coverage that may respond to an owner’s share when the underlying cause is covered.

Loss Assessment

Coverage found on a unit owner’s policy that may respond when the association validly assesses members for a covered loss — for example a deductible or a shortfall on the master policy. Limits are commonly modest and are frequently the gap owners discover only after a claim.

Declaration

The recorded instrument creating a condominium regime or a property owners’ association and defining units, common elements, and the association’s obligations — including its insurance obligations. Where statute is silent, the declaration controls. No declaration is representative of all declarations, and interpreting one is legal work.

Community Association Manager

A person or firm engaged by an association to administer its operations. The manager is a separate legal entity from the association and carries its own insurance. The association’s policies do not automatically insure the manager, and the manager’s policies do not automatically insure the association.

Property Owners’ Association

An association governing a residential subdivision, generally subject to Chapter 209 of the Texas Property Code. Chapter 209 contains no insurance requirement; a subdivision association’s obligations arise from its declaration, lender requirements and other applicable law.

Condominium Association

The association governing a condominium regime. Regimes declared on or after 1 January 1994 are governed by Chapter 82 of the Texas Property Code; earlier regimes fall under Chapter 81, though § 82.002(c) extends several Chapter 82 provisions — including the § 82.111 insurance requirement — to them.

Property and valuation

Actual Cash Value

A valuation basis that reflects depreciation — broadly, what the property was worth at the time of loss rather than what it costs to replace. Texas Property Code § 82.111(a)(1) permits a condominium association to satisfy its statutory obligation on either a replacement cost or an actual cash value basis. Secondary-market lender requirements are commonly stricter and may treat an ACV policy as unacceptable.

Replacement Cost

A valuation basis measured by the cost to repair or replace with like kind and quality, without deduction for depreciation. Whether a policy actually pays replacement cost usually depends on whether the property is repaired or replaced, and on satisfying any coinsurance or valuation condition.

Agreed Value

A property policy provision under which the insurer and insured agree in advance on the insured value, suspending the coinsurance condition for the policy term. It removes the coinsurance penalty; it does not by itself increase the limit or guarantee the value is adequate.

Property Coinsurance

Distinct from health-plan coinsurance. In property insurance, coinsurance is a policy condition requiring the insured to carry a limit equal to a stated percentage of the property’s value. If the limit falls short at the time of loss, the claim payment is reduced proportionally — a penalty applied even to a partial loss. For the health-plan sense of the word, in which an insured pays a percentage of a covered medical expense after the deductible, see the group health glossary.

Ordinance or Law

Coverage addressing the additional cost of complying with current building codes when repairing or rebuilding after a covered loss — including the value of the undamaged portion required to be demolished, demolition cost, and the increased cost of construction. Older habitational buildings are where the shortfall is usually largest.

Business Income

Coverage for lost income and continuing expenses while damaged property is restored. In property management the exposure is usually lost rental income, and the period of restoration — not the annual rent roll — determines what is actually recoverable.

Extra Expense

Coverage for the additional costs incurred to continue operations after a covered loss, such as temporary relocation of an office or of residents where the program provides it. It sits alongside business income rather than duplicating it.

Equipment Breakdown

Coverage for sudden and accidental mechanical, electrical or pressure-system failure — boilers, chillers, elevators, HVAC and building electrical systems. A standard property form generally excludes these causes of loss, which is why the coverage is added separately.

Blanket and Scheduled Limits

A scheduled limit assigns a specific amount to each location. A blanket limit applies a single amount across multiple locations or coverages. Blanket wording can help where individual values are understated, but it depends on an accurate statement of values and on the policy’s own conditions.

Statement of Values

The schedule of buildings, values, construction, occupancy, protection and exposure submitted to underwriters. It drives pricing, capacity and, after a loss, arguments about whether the reported value was accurate. It is the single most consequential document in a property submission.

Underwriting readiness

The terms below govern how a schedule is presented to and received by property underwriters. They are the working vocabulary of the commercial property portfolio practice and its SOV readiness guide.

COPE (Construction, Occupancy, Protection, Exposure)

The four categories of building information property underwriters use to evaluate a risk: what the building is made of, how it is used, how it is protected against fire, and what surrounds it, including natural hazards. Complete COPE data for every location is the baseline expectation for a property submission, and blank fields are generally read against the insured.

Total Insured Value (TIV)

The combined insured value of a schedule: building values, business personal property, and business income or rental value across every location. TIV is the primary figure underwriters use to size capacity for a portfolio, and it drives which markets can realistically consider the account.

Underwriting Submission

The package a broker sends to markets to obtain terms: the statement of values, loss history, occupancy and protection detail, business income figures, and a narrative describing the risk and its controls. Submissions compete for underwriter attention, and complete, current, internally consistent submissions get worked first.

Loss Run

A carrier-issued report listing the claims on a policy: dates, causes, amounts paid and reserved, and open or closed status. Underwriters typically expect several years of loss runs, and the insured is entitled to request them from its carriers. Unexplained or open losses are better addressed before marketing than discovered during it.

Layered and Shared Property Program

A structure that divides a schedule’s total limit among multiple carriers, each taking a defined layer above the one below it, or sharing percentages of the same layer. It is common where a portfolio’s size or catastrophe exposure exceeds single-carrier appetite. Attachment points, layer pricing, and carrier participation are set by the program design.

Catastrophe (CAT) Exposure

A portfolio’s exposure to natural hazard events capable of affecting many locations at once: wind and hail, named storm, flood, earthquake, wildfire. Catastrophe perils commonly carry their own deductibles, sublimits, or separate placements, and underwriting markets may require catastrophe modeling before quoting a concentrated schedule.

Wind and Hail Percentage Deductible

A deductible expressed as a percentage of the insured value at the affected location rather than a flat dollar amount. On a large schedule the difference is substantial: one percent of a building’s value can exceed a flat deductible many times over. The basis the percentage applies to, per building, per location, or per occurrence, is a wording question worth reading closely.

Protection Class

A public protection grading that reflects a location’s fire protection: the responding fire department, water supply, and related factors. It is a standard COPE input, it varies location by location, and it is one of the fields underwriters expect to see completed on a statement of values.

Margin Clause

A property policy provision that caps recovery at a stated percentage above the value reported for a location on the statement of values. It converts an understated schedule directly into a claim shortfall, which is why valuation discipline matters more under a margin clause than under blanket wording alone.

Secondary COPE Characteristics

Building detail beyond the primary COPE fields: roof geometry, covering and anchoring, wall cladding, glass area, foundation type. Catastrophe models use secondary characteristics to differentiate buildings, and undocumented detail is generally defaulted conservatively, which flows into modeled pricing.

Habitational operations

Property Manager

A person or firm engaged to operate real property for its owner. In Texas, a person who for compensation controls the acceptance or deposit of rent from a resident of a single-family residential unit falls within the statutory definition of a broker under Occupations Code § 1101.002(1)(A)(x), and § 1101.351(a) requires a license to act as one. Whether a specific arrangement requires licensure depends on the facts.

Habitational Risk

Underwriting shorthand for residential occupancies — apartments, condominiums, student and senior housing. The classification carries recognized frequency patterns, particularly water damage and resident-related liability, and it materially affects carrier appetite.

Vacancy

A property condition defined by the policy, generally where a building lacks enough contents or tenancy to operate as intended, typically after a stated number of consecutive days. Vacancy provisions commonly reduce or suspend coverage for specified causes of loss. The definition and the day count vary by form.

Unoccupancy

A building that remains furnished and equipped but is not currently occupied. Policies distinguish this from vacancy, and the distinction matters because the coverage consequences differ. Both are form-dependent and should be read rather than assumed.

Habitability

The condition of a dwelling as it relates to a landlord’s statutory duties. Texas Property Code § 92.052 requires a landlord to make a diligent effort to repair or remedy a condition materially affecting an ordinary tenant’s physical health or safety once proper notice is given. Related duties include the security devices required by § 92.153 without any tenant request.

Assault and Battery Exclusion

A liability exclusion removing coverage for claims arising from assault or battery, sometimes extending to related allegations of negligent hiring, training or security. It appears frequently on habitational placements and is often the deciding provision in a negligent-security claim.

Animal and Breed Exclusion

A liability exclusion removing coverage for claims arising from animals, or from specified breeds, on the premises. Where a pet policy and an insurance exclusion disagree, the exclusion governs the claim.

Tenant Discrimination

Allegations that leasing, screening, occupancy or eviction practices treated an applicant or resident unlawfully. Coverage is not automatic and where offered is usually narrow and specifically worded. It is a distinct exposure from employment practices liability, which concerns employees rather than residents.

Professional and management liability

Property Management Errors and Omissions

Professional liability responding to allegations about how a property was managed — failure to obtain required insurance, mishandled funds, leasing or screening decisions, misrepresentation. Purchased by the management company, not by the association or the owner. It does not respond to physical damage at a managed property; general liability and property insurance address that.

Directors and Officers Liability

Management liability responding to allegations about decisions made by an association’s board — rule enforcement, assessments, elections, architectural decisions. Purchased by the association; board members are insured under the association’s program, not under the management company’s errors and omissions policy. Coverage for non-monetary relief and for enforcement actions varies considerably by form.

Employment Practices Liability

Coverage for employment-related allegations by employees and applicants — discrimination, harassment, wrongful termination, retaliation. It follows the employer, so in the association context it generally attaches to the management company. In Texas, Labor Code § 21.002(8) sets a fifteen-employee threshold for most discrimination claims, but § 21.141(1) defines “employer” for the sexual harassment subchapter as a person employing one or more employees.

Employee Dishonesty

Crime coverage for loss of money, securities or other property caused by an employee’s dishonest act. Whose employees are covered depends on the policy’s definition of employee — which is why an association and its management company each need to know whose policy would respond to a theft by the manager’s staff.

Crime Coverage

A commercial policy addressing theft, employee dishonesty, forgery, funds transfer fraud and, where added, social engineering fraud. Distinct from a fidelity bond, which is a surety instrument. Associations commonly face fidelity requirements set by the declaration or by lenders rather than by statute.

Third-Party Fidelity

An extension covering loss caused by the dishonest acts of a covered party against a client — relevant where a management company handles association or owner funds. It is not standard and must generally be added.

Claims and policy mechanics

Only the terms specific to property and community association programs appear here. The general policy mechanics are defined in the general liability glossary.

Extended Reporting Period

An option to report claims after a claims-made policy ends, for acts committed during the policy period. Terms, cost and duration vary and are typically time-limited from the date coverage ends.

Loss Payee

A party entitled to receive payment for a covered property loss to the extent of its interest. It confers a payment interest, not the broader rights of a named insured.

Mortgagee

A lender holding a security interest in the property, given rights under the property policy’s mortgage clause — typically including notice of cancellation and, in some circumstances, protection even where the insured’s own claim would be denied.

The words that appear in your declaration, your management agreement and your certificates