As I tell my neighbors and friends, when one lives in a high-rise condo – it is not a question of if water will ever invade your home but a question of when. Thus, it is important to ensure one has the proper insurance coverage for their condo and personal belongings.
Imagine the scene – you arrive home after a long day at the office and notice that water has entered your home from a neighboring unit either above or beside you. Your flooring is wet and grandma’s Oriental rug, valued at $500K is completely ruined. What do you do? Well, if water is still entering your home, you inform the concierge staff (if you have this service) and then begin knocking on neighbors’ doors above and beside you to determine the source of the water and stop it.
With this scenario, let’s assume that the source of the water was a neighbor’s hot water heater. The neighbor with the hot water heater travels a lot and is rarely at home. Therefore, they had no possible way of knowing about the leak.
What is the neighbor’s liability and responsibility to you for your flooring and more importantly grandma’s ruined Oriental rug? You might be surprised to learn that the neighbor has no responsibility whatsoever for the damages to your home, much less grandma’s rug.
Why? Because, the neighbor with the hot water leak was not negligent as they were unaware of the leak. The only way a neighbor can be held liable and responsible for the damage is if they were aware of the problem (leaking hot water heater) and did nothing to correct the problem (fix the leak).
If grandma’s rug is really worth the $500K, you should be in touch with your insurance provider as soon as possible to file a claim. It is your insurance that will repair your damaged flooring and compensate you for the rug.
Other important insurance considerations for condo owners:
1) In the event of a major loss, determine if the association’s policy covers betterments and improvements to your home. When a loss occurs, some policies will return your condo to its current condition, others will only return your condo to the original specifications for building design and finishes. If you have replaced the original carpeting with exotic hardwoods, you may only be compensated for the price of carpeting.
2) It is recommended that you have deductible coverage within your policy. If a loss occurs, the association can assess you the deductible on the association policy. For example, where I live the building’s deductible is $10K. My personal insurance policy includes coverage in the event I am assessed the $10K deductible by the association.
3) Personal belongings are not covered by the association’s insurance. You must purchase the proper amount of insurance to replace your personal possessions in the event of a loss.
Make sure you have the proper coverage to prevent much frustration when you arrive home to a pool of water in your condo.
There are several lines of coverage you should look for in your policy; property, personal liability and an umbrella.
Property insurance coverage is used to cover various forms of real property (buildings and structures) and personal property that includes all other forms of property other than real property. This type of policy insures property against various perils referred to as causes of loss. There are two different types of causes of loss forms in the property policy; Specified Perils and Special Coverage. Specified perils does exactly what you would think, it covers property for specified causes of loss. Special coverage is broader in that it doesn’t name the perils insured for, instead it names the exclusions. If available, you should always try to obtain the broadest coverage.
For homeowners, this coverage rebuilds your house and provides you with money to replace your personal property. However, for condo owners this is the area that covers you for your portion of your association’s deductible and provides you with money to replace your belongings. With an endorsement to either policy, your carrier can compensate you for your expenses if you have to temporarily vacate your home or condo due to a large loss. There are many endorsements to a property policy that are very beneficial and in some cases necessary in order to provide a broad policy.
A personal liability policy protects you against injury or damage claims made by other parties. Liability policies are written on what is referred to as an occurrence basis. An occurrence is defined as an accident, including continuous or repeated exposure to conditions, that result in bodily injury or property damage neither expected nor intended by the insured.
Personal umbrella policies provide excess coverage over your auto and personal liability policies. Some consider this policy an extra coverage item but I think it is a fundamental line of coverage these days. If you are found negligent, and the loss becomes extremely large, a personal liability limit of $100,000 may not be enough to cover these expenses.
Please make sure that your policy is tailored to your specific needs because you don’t want to find out that you didn’t have the correct endorsement or coverage at the time of loss. If you are spending 15 minutes or less reviewing your policy, then you probably aren’t getting the coverage you think you are. If you are naming your own price then you are not getting what you think you are. The coverage is in the details!!!
For additional insurance information, please contact an agent of your choice.
Mr. Buddy Whitaker of Hamby & Aloisio Inc. contributed to this blog. Buddy is an insurance provider to individual condominium owners and community associations. www.hains.com
Midtown resident Tim Huffman is a licensed Community Association Manager and holds the CMCA®, AMS® and PCAM® designations from Community Associations Institute.