Policy Gaps In Insuring Town House And Condominium Units

By on April 12, 2017

For some people, moving into a condominium is like sending a message to society that they have made it. Even the architecture of the building leaves you in awe.

Buying a home is already a huge financial commitment to undertake. Upgrading to another one can be seen by some as taking this to the next level of success and financial independence.

But like many, you could be making the mistake of assuming a typical home insurance plan works the same way for your previous single family home and the new condominium.

That is far from the truth.

There are shortcomings that will show you the new playing field you are operating now.

Part of the role of an association is to take care of insurance matters for whole buildings or cluster or buildings under their care.

If you live in a town house or condominium, you should get familiar with how they work.

A master policy is usually in place to insure all structures while home owners will have to insure their own belongings.

A gap starts to appear when some structures owned by home owners are under the care of the association while some structures are the responsibility of the owners.

This is a classic recipe for claim disputes to arise.

While some unit owners may pretend as if they are not aware of their liabilities on structural damage, some have a genuine misinterpretation that they are only required to insure their personal belongings only.

Most master policies taken up by associations to cover the building will include cover for at least the bare floors and walls. The rest lies with you unless it is specifically indicated otherwise.

So this means that in the scenario where a fire burns your house into a sooty mess and you had only insured your belongings, you might just wished you were burned together with your house when you see the gap that was left uninsured.

The frightening thing is that these scenes are usually how home owners find out about these coverage gaps which exist. By then it is already too late.

The most basic preparation you should first do is to check up with your association what exactly are the parts that the master policy covers.

It should be clearly spelt out as documents relating to this are often very clear and specific on things like exclusions.

You are specifically looking for information relating to responsibilities that lie with owners and the association.

Structures that are your responsibility will implicitly mean that you have to arrange for their protection yourself.

This is to say that if you do run into a gap one day, you have only yourself to blame for not investigating these information in the first place.

Things that are often excluded, making you responsible include carpets, ceramic tiles, appliances, counter tops, built in fixtures, etc.

You should be able to obtain comprehensive list by checking out the declaration prepared by the association.

If you have made any structural additions or improvements, surely you should be aware that you are responsible for them as well.

This includes structures that were initiated by previous owners.

If you need peace of mind, get a senior member to conduct an inspection with you to point out what is original and what are modified. Bring a camera along.

Patching up the gap

You will have to review Coverage A, B, C, and E, within your home insurance.

You will probably have guessed that you must work out a coverage limit you need in order to patch up the gap leaving the home interior exposed.

This is best discussed with your agent as it can be complicated. After which you will have to expand the cause-of-losses.

Your existing plan will include a list of 15 losses that are covered. You want to widen it. You do that by requesting a special perils arrangement.

Take note that even doing so still expose you to a list of special exclusions.

The next thing you must do is to check on whether detached structures need your attention.

If a cabin is attached to the main house, you need to check out your Coverage A and raise the limit as necessary. If it is detached, scrutinize Coverage B.

The third thing to focus on is your personal property.

This is your responsibility from the start. But since you are now conducting a review, you might as well take a look to see if this area is adequate. Just remind yourself to get a limit that is sufficient to replace what you own.

To avoid a depreciated claim being imposed, sign up for replacement cost coverage option so that your items are replaced based on new costs.

Also consider expanding the cause-of-loss on your personal belongings. These actions should be able to fully protect your from losses of personal property.

The fourth step concerns personal liability on property damage and injuries.

You can determine the amount that you are comfortable with and pay the premium accordingly. The challenge is in determining how much you need.

When in doubt, check with your agent to work out the numbers suitable and sufficient for you.



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