Components of Condo Insurance Fidelity Coverage

When you need to know what is covered by your condominium insurance policy, it may seem you have stepped into a different world where everybody speaks another language and only you are left to find your way through a maze of legalese and unfamiliar terms. This is not necessarily the case.

One thing sets condominium ownership apart: The condominium owner has deed to private living space, plus ownership and financial obligations for certain common areas.

A closer look at particular components of the policy and an understanding of a few definitions will ease the headache and clarify how condominium owner’s insurance works.

Property coverage protects and provides repair and replacement of the building in the event of physical damage from perils such as fire, earthquake, flood and terrorism.

The articles of the association and state law determine exactly what building areas are covered under the association’s master policy, but there might be added responsibility for common areas like lobbies, hallways and recreational facilities, and legal liability for a visitor injured there, if the condominium association coverage proves inadequate.

An individual unit is the actual space in which you reside as identified on the developer’s plat and plans and the condominium declaration. In most instances, coverage stops inside the exterior walls of your unit; that is, you are responsible for walls inside your unit, possibly fixtures, as well as personal property and liability exposure.

General liability covers lawsuits resulting from a fall or damage to a person or property in areas of the building outside your unit.

Umbrella coverage is excess liability coverage that provides additional protection when primary coverage has been exhausted by a claim.

Equipment breakdown insurance covers large items of equipment such a boilers, chillers, and elevators that are more likely to break down in a residential building. It also covers some items not covered in the primary policy, like damage from lightening strikes.

Directors’ and officers’ liability protect these persons from suits that might arise as the result of an action taken on behalf of the association, including wrongful decisions made by the board.

Environmental liability protects owners in the event of damages from mold, seepage and fumes resulting from environmental factors and almost anything airborne that would need the attention of a professional contractor.

Fidelity coverage covers forgery, fraud and theft by an association employee.

Underwriters consider replacing a building of like and kind, and review age of building, type of construction including age, type and condition of roof, wiring, number of floors, and fire protection systems. Proximity to a fire station and whether it is full time or volunteer, has great bearing.

Condominium owner’s have unique insurance requirements only covered by an insurance policy specifically designed for condominium living. These policies are usually item specific (if it is not written in the policy it is not covered), and it is important to understand your liability versus that of the condominium association, so that when tragedy strikes, you are not faced with financial disaster.