Insurance Coverage & Requirements
The following insurance information is provided for your utilization. It briefly explains your coverage through the Association, and your personal needs. It also details claims procedures and policy deductibles, depending upon the incident.
Condominium Ownership
In a condominium form of ownership, you own the interior of your unit. You also have an undivided interest in the exterior of all buildings and common elements, along with the other owners in the Association. Almost everything outside the perimeter walls of your unit is a common element. There are a few exceptions, which would include items that service only your unit. This includes electrical and water lines, air conditioning units, patios, decks, windows, doors, garage doors, etc. (if applicable). These items are considered part of your unit, even though they may be located beyond your perimeter walls.
Condominium owners share equally in the ownership of all common elements. Therefore, even though you may have a shrub in front of your unit, it does not belong to only you, but is owned In common by everyone collectively, and not just the residents in that particular building. Please check your Association Documents for a more detailed description of the common elements.
The Association (the owners collectively) maintains an insurance policy which includes blanket building coverage, including each unit. The units are insured as a “builder standard” type. This would include the unit as originally constructed by developer, exclusive of all upgrades, betterments, or improvements. Therefore, each building and each owner’s unit is directly insured under the master insurance policy.
Master Policy Coverage
The Association’s insurance policy is the primary policy. Each owner’s individual H06 policy is secondary. The Association’s insurance policy includes blanket building coverage, which provides for the replacement of the condominium building, including the unit (as described above), if a covered incident/accident/damage occurs. The policy also provides for common area liability coverage, and directors and officers liability insurance. Like all insurance policies, the Association’s policy includes a deductible. Each year, when the insurance policy is renewed or placed with a new company, the policy deductible is determined by your Board of Directors. The deductible, per claim is $25,000. If there is damage to the interior of a unit, the homeowner is responsible for their share of the master policy’s deductible.
Personal Coverage
For their personal protection, most condominium owners also maintain separate insurance coverage, commonly referred to as an H06 policy. This policy, which is specifically designed for condominium owners, should provide insurance protection for the value of your personal belongings, and developer upgrades/betterments installed in your unit when it was built. You should also maintain insurance for any other upgrades or improvements that were made to your condominium unit, as well as personal liability coverage. It is recommended that, in addition to insuring the replacement cost of all your personal property, you also include building coverage for the interior of your unit, for an amount of $25,000, or an amount equal to the Association’s policy deductible. The building coverage contained in your H06 policy would provide additional protection for you, in the event your condominium unit was damaged and the full cost was not reimbursed by the Association’s policy, because of the deductible. An owner should also investigate “loss assessment” insurance. This would cover you, personally, for any special “insurance liability assessment” made by the Association due to an insurance liability loss. If a loss occurs, your property may be subject to updated building codes due to changes in laws and ordinances. This type of coverage should be investigated with your personal agent. You should also ensure that your H06 policy includes coverage for water damage and wind driven rain. Loss assessment insurance, building coverage, law and ordinance insurance and water damage coverage are fairly inexpensive. The Association recommends that you contact an insurance agent concerning your personal insurance needs.
Building Exterior Damage
If an incident occurs that damages the exterior of the building(s), or the common elements, the Association would file a claim against the master policy, and any amount settled would be less the policy deductible.
Building Exterior Damage and Unit Damage
If damage occurs that affects both the exterior of the building and the building interior of an individual unit, a single (combined) claim should be filed for both areas. The responsibility of the deductible would be pro-rated between the Association and the owner of the unit, based on the percentage of the covered damage. In addition to filing a claim against the Association’s Policy, a unit owner should also file a claim against their HO 6 Insurance Policy
Unit Damage – Caused by Common Element
If a condominium unit were damaged by an accidental direct physical loss to a common element, such as a roof leak, then a claim should be filed against both the master policy and the owner’s individual H06 policy to determine if it is a covered loss. Policies vary as to coverage for building deficiencies and water damage. Any insurance proceeds paid from the Association’s policy would be less the policy deductible.
Unit Damage – Caused by Owner
If damage occurs inside of a unit, which was not caused by another resident, by the failure of a common element, or in conjunction with the damage to a common element, then the unit owner would be directly responsible for the master policy deductible. To provide for the maximum reimbursement, a unit owner should file a claim against both the Association’s policy, and their H06 policy. If it appears that the cost to repair the damage would be less than the deductible of the master policy, then an owner should file a claim exclusively against their personal policy. The owner of the unit would be responsible for their H06 policy deductible.
Unit Damage – Caused by Another Resident
If a condominium unit is damaged by the actions of another unit owner or resident, such as when a unit sustains water damage caused by a neighbor, the owner of the damaged unit should file a claim against their neighbor’s H06 policy. In this instance, the cost to repair the damaged unit should be reimbursed in full. The owner of the damaged unit could also file a
claim against both the Association’s policy, and their own H06 policy. Any amount received from the Association’s master policy would be less the deductible.
Water Damage
If your home sustains any water damage, it is imperative cleanup occur immediately, and that you file an insurance claim as quickly as possible. If water is not cleaned up, more damage may occur. What begins as a relatively minor water damage claim may become a costly loss and may subsequently result in higher insurance rates. Furthermore, untreated water damage and/or standing water can result in mold and/or fungus growth. Please be advised most insurance policies no longer provide coverage for bodily injury or property damage as a result of mold.