Condo Association Insurance: Things To Know
Condo Association Insurance: Things To Know
Condominium as we all know is a shared building and a resident has to insure only his portion of the property through Condo association insurance. Insurance terms are not the same for all the complexes, so it is of great importance that you have proper knowledge about the insurance coverage.
A Condominium unit owner shares the ownership of the entire complex with the other unit owners and specifically owns his part only. Based on shared ownership, the owners have a collective responsibility towards insuring the common zones like pool area and hallways. The condo association collects the dues per month to insure the common regions from the unit owners.
Now, the unit owner is responsible for insuring whatever is there in his portion separately. The master policy of a condo association should put down clearly which portions will be separately insured and which parts will be covered through condo association insurance.
The master policy of condominium association typically offers the following coverage:
Bare Walls - This covers the common elements in the condo. The areas which it does not cover include the fixtures, ceilings, floors, permanent appliances. It also does not cover any property inside the four walls of the unit. Under such a circumstance, it is important to buy insurance for the properties individually.
All In - This type of coverage normally includes the common components. It also includes property that has been initially installed and any kind of expenses made by the unit owner to improve the condition of the unit.
Single Entity - This again covers the common elements which have been installed at the outset of building the condo according to the original plans of the association.
Condominium association insurance characteristically covers the shared areas of the condo. Hence, there is a deductible involved. It is mostly mentioned in the policy that during any kind of natural disaster, the losses will be compensated by the commercial insurer, however, there will be a deductible and that will be divided within the unit owners.
A trend of high deductibles has been noticed of late, where sometimes it reaches to a whopping $50,000. Go through the bylaws of the association before buying a unit. During the time of purchase, you must have a copy of the insurance agreement of the association wherein the responsibilities of the individual owners and the society will be specified.
Determination of how much and which parts need to be covered by you is important. You can estimate the coverage amount by taking into account the money spent by co owners on recent improvements. Once you have an estimate, it is time to decide which type of coverage you will require. If you are opting for cash value coverage, then the cost of the insured objects will be compensated without considering depreciation.
Replacement cost coverage will provide you the money taking into consideration the cost of replacing an old object with a new one. While buying a policy, be sure to check whether structural elements and contents are covered.
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