Condo insurance protects condominium owners from property damage, destruction or theft. Without condo insurance, condo owners are subject to greater financial risk if damaged property costing more than insurance deductibles and annual premiums is incurred in a given year. Additionally, condo insurance can cover expenses associated with natural hazards such as damaging weather, third party liability within the condo and problems associated with both structural and internal construction of the condo. Two types of condo insurance are typically required for more comprehensive insurance coverage and include condo association master policies, and individual condo insurance.
CONDO INSURANCE COVERAGE LIMITATIONS:
As comprehensive as a condo insurance policy may be, condo insurance does not cover all events and circumstances. For example, owner negligence of property that leads to damage is not necessarily covered by condo insurance. In other words, personal vandalism of property may be considered to be within the condo owners control to prevent, and are therefore not covered by the condo insurance. Moreover, the extent of individual condo insurance coverage depends on what the condo owns, has listed with in the insurance policy and the effectiveness of carrying out the claim procedure. Another item condo insurance may not cover is the full cost of damage as the insurance’s method of property valuation may be different from that of retail cost.
Condo insurance disputes may occur between condominium owners and property management companies that request and oversee condominium association fees. In some cases the condominium property manager will pay maintenance costs from its own fund for the purpose of property upkeep and maintenance including landscaping, external painting and snow removal. However, in cases which individual condominium owners are required to meet building insurance and safety codes, liability and responsibility may be questioned. For example, if a dryer vent begins in the condominium and ends on the roof of the condominium, who is responsible for the cleaning costs of the vent if the external vent protection must be removed for internal cleaning? Some might consider this part of the condominium owners responsibility but an argument might be made that the external labor is in fact a responsibility of the condominium property management.
PERCENTAGE OF CONDO OWNERS WITH INSURANCE:
Depending on where one lives, some form of condo insurance may be mandatory by law and/or by the policy set forth by condominium organizations. More condominium owners have condo association master policies than both individual and master policies as the former is more often an owner’s choice than the latter. Nevertheless, according to information gathered by the insurance information institute, 96% of homeowners had some kind of home insurance in 2006, but 66% of homes were under insured in 2007. This reflects the importance of having both a condo association master policy and individual property insurance.
CONDO ASSOCIATION MASTER POLICIES VS INDIVIDUAL PROPERTY INSURANCE:
Two types of condo insurance are available to condominium owners. These insurance policies include 1) Condo association master policies and 2) Individual condo insurance. The two types of policies differ in one key area, specifically, condo association master policies protect against external damage and in some cases limited internal damage such as basic furnishings and/or equipment, whereas individual condo insurance protects against internal damage and property theft. Without an individual condo insurance policy, electrical problems, fire damage, non-preventable vandalism to property within the condo and plumbing accidents are not covered.
Another difference between the two policies is the cause of property damage. If internal damage is caused by an external source such as a tornado, a claim can be made using the condo association master policy since the problem was derived externally. The reverse is true for individual policies where if external damage is caused by an internal cause such as fire, then the individual policy can be used to make a claim
In summary, supplementing master condo insurance with individual condo insurance is a good idea to maintain at least a basic insurance for liability, some property protection and building structure. The more comprehensive the coverage, the greater the protection to personal property can be. If multiple policies are held with the same company, and higher deductibles are utilized, the insurance premium may not be as high as if the case is otherwise. The risk of not being insured, and having an event where condo insurance would have been useful, could end up costing more than being insured, and making a claim against that insurance.