Condominium owners need to understand that the insurance maintained by their homeowners association is not sufficient to cover for all losses that may be suffered by the owners even if the loss is caused by a condition in the common area. An association’s “master policy” typically insures the commonly owned basic buildings and their components ( such as walls, roofs, floors, and elevators), but leaves the individual unit owners with the responsibility of insuring such things as their appliances, carpeting, cabinets, wall coverings, and other items in their unit which sometimes include the interior walls. In order to be more fully covered for losses commonly suffered by condominium owners which are not covered by the association’s insurance policy, a “condominium owner’s” insurance policy should be purchased by the owner to provide coverage for items that are not covered by the association’s master policy.
Items Commonly Covered by an Owner’s Condominium Insurance Policy.
A typical condominium owner’s insurance policy will provide the owner with insurance coverage for many different forms of losses that can be suffered by the homeowner, including:
- Building Property Coverage- insures an owner’s separate interest including additions, alterations, and installations that are part of the owner’s unit and which are the owner’s insurance responsibility under the association’s governing documents.
- Personal Property Coverage- insures against losses to an owner’s personal property such as furniture and clothing.
- Loss of Use Coverage- if damage from a covered loss renders an owner’s unit uninhabitable, loss of use coverage will provide funds for the owner to stay in a substitute place for a period of time. The quality of the substitute place will be commensurate with the owner’s standard of living.
- Loss Assessment Coverage- insures homeowners for special assessments that are imposed against unit owners by the homeowners association, up to a stated amount.
- Personal Liability Coverage- insures homeowners for liability on claims or lawsuits seeking damages for personal injury or property damage resulting from acts by the insured or family members that the insured is responsible for. This coverage will also typically cover the costs incurred to defend a case (attorney fees and court costs), even if the case was groundless.
- Medical Payments Coverage- insures homeowners for medical expenses, up to a maximum amount, incurred by people who are accidently injured on the insured’s property.
- Inflation Coverage- provides increased coverage for losses to an owner’s property when the cost of replacement has increased due to inflation.
- Additional Living Expenses Coverage- insures for the actual loss incurred for necessary increased expenses over and above what a homeowner normally spends for food, shelter, and related items for the shortest time required to repair or replace the premises, or for your household to settle elsewhere, up to a maximum amount.
- Fair Rental Value Coverage- insures for the loss of rental income resulting from a covered loss, up to a maximum amount (usually 12 months).
- Debris Removal Coverage – covers reasonable expenses incurred to remove covered damaged property following a covered loss.
- Temporary Repairs Coverage – covers temporary repairs incurred to protect covered property from further damage.
Additional Coverage– in addition to the items listed above, most condominium owner’s insurance policies provide limited additional coverage for such items as:
- Trees, Shrubs and Other Plants
- Fire Department Service Charge
- Credit Card or Bank Fund Transfer Card, Forgery and Counterfeit Money
- Refrigerated Products
- Volcanic Action.
- Claim Expenses
- First Aid Expenses
- Damage to the Property of Others
Items Not Generally Covered by a Condominium Owner’s Policy.
A typical condominium owner’s insurance policy will provide comprehensive coverage, but it still will not cover certain types of losses that may be suffered by an insured, such as:
- Bodily injury or property damage that is expected or intended by the insured.
- Business pursuits.
- Professional services provided or not provided.
- Ownership, operation, use, or maintenance of aircraft, motor vehicles, and certain watercraft.
- Water damage caused by flood or underground water.
- Earth movement including earthquake and mudslide.
- Damage caused by settling, deterioration, contamination or nuclear hazard.
- Damage caused by birds, rodents, insects or domestic animals
Owners of separate interests within a condominium homeowners association should make certain that they have a condominium owner’s insurance policy to protect them in the event of a covered loss. As not all policies offer the same coverage and different insurance companies charge different amounts for their policies and provide different discounts, homeowners should take the time to shop around and compare the coverage and costs to make sure they are getting the best possible coverage for the most affordable price.