Condominium Insurance, Part One

March 26, 2008
Lynnsy Logue, The Real Estate Lady and Condo CanDo, Charlotte, NC

One more step…Condominium Insurance.

Let’s be precise. This is condominium insurance. Not co-op or town home, but genuine condominium insurance. Good. In every condominium and co-operative and even townhome communities there is a master insurance policy. Each association requires a certain level of insurance. The Lender requires proof of this Master Policy. Further the coverage must be consistent with the legal requirements. The buyer’s lender has a form that is completed by the Home Owner’s Association regarding this policy.
This master policy may not cover your personal loss. The master policy covers the common areas that owners share with others in the building like the roof, elevator, hallways and walkways for both physical damage and liability. If someone takes a tumble, the master policy provides coverage and if a lawsuit ensues, the master policy will also cover the legal costs incurred by the Home Owners Association.If a unit suffers maximum damage, the master policy will bear the expense for the restoration of ceilings and walls. And then there are the grey areas: appliances. Sometimes a master policy will cover them and sometimes not. Remember the deductible and your HOA should know that figure.But…read carefully…any improvements that previous owners or you have made will not be covered. I read this in my insurance brochure, the word is “betterments”. Wallpaper or upgrades in the kitchen or bathroom are not covered. It is better to know this before you need to know this, right? The most common occurrences are the overflowing bath tub or shower: tumbling water into the units below. The Master Policy will repair floors and ceilings…other items that were damaged like that hand woven Greek wall hanging, Persian rug or priceless water color will lack coverage. For those items, you will need your own individual policy. This insurance policy is known as an HO-6 policy. This gives you coverage subject to a deductible for your personal furniture, clothing and “betterments” in your unit.
Depending on your own financial situation, the HO-6 policy can also include such things as reimbursing you for monthly assessments and alternative lodging while you are unable to reside in your unit; water and sewer back-ups (which are all too common especially in older buildings); and even expensive jewelry, stamp or coin collections, or fur coats. You should be able to obtain this kind of policy through any insurance agent
Some associations require that every owner obtain the HO-6 policy, and many experts strongly recommended that every association make this a requirement.
I have read that the best approach is to obtain that policy from the same carrier that issued the master policy.

Condo Insurance, Part Two…Coming Up!
Good insurance information at Insurance Information Institute: www.iii.com