Condominium insurance policies may be one of the most misunderstood personal insurance policies available today. Reading and understanding your condominium association by-laws and documents is critical in order to understand what portion of the condo you are responsible for and therefore, need to insure in order to avoid coverage gaps. Just because the association has a master policy insuring the building and premises does not mean that you are not responsible for damage to any portion of the structure.
Association agreements and/or by-laws detail what each unit owner is responsible for and what the association itself is responsible for. Many association agreements state the unit owner's responsibility as "studs in". This means that the unit owner is responsible for damage to everything inside of the studs within the walls. This includes drywall, paint and wall coverings, kitchen cabinets and countertop, carpet and tile, and any other permanently installed item within your unit. Some agreements make the association responsible for all permanently installed floor, ceiling, and wall coverings and all permanently installed fixtures, such as cabinets and countertops. In this situation, the unit owner typically requires very little "Dwelling" coverage on their own condo policy.
In addition to property damage that you may be responsible for, you can also be assessed a portion of a loss to a common area of the association.
It's vital to understand your responsibilities as they are outlined in your condo association agreement or by-laws in order to make sure your own unit owners coverage provides appropriate endorsements and coverage amounts to fill the gaps that may exist between your insurance and the association master policy.
If we have the opportunity to review your association by-laws we will be better prepared to assist you in arranging proper coverage for your unit owners policy.
All unit owners coverage should include increased loss assessment coverage and and special causes of loss coverage for dwelling, even if you only carry $5,000 of dwelling coverage.
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