Who insures your condo and are they doing it right?
I knew it was going to be an interesting day when I pulled into the parking lot on Monday and Gerry and his wife Louise were at the door, waiting for us to open. Ushering them inside, I barely had them seated and my coat off before Gerry burst out, “I don’t understand how my condo policy works! I thought the Association had a policy that covered me, but now it looks like they don’t. No one down there can tell me what they cover or don’t cover. When we bought the condo the realtor told us the Association covered the unit inside and out and we only needed to insure our personal property. How do I know what I need?”
Wanting to know more about what caused Gerry’s anxiety so I could address his concerns specifically, I asked what had happened that made him think he had a problem. Louise told me that their neighbor, a young man who had gone skiing one weekend, had returned to find his hot water heater had burst and flooded his unit. The water had warped the wood laminate flooring, ruined the wall to wall carpeting and caused damage to his furnishings. He put a call into the Association and was unhappy to find that the Association’s company was denying his claim as there was no coverage for either discharge of hot water or sudden cracking of hot water heating system on their policy. His own insurance policy would pay for the damage to his furniture but only $5000 of the damage to the flooring. He was going to have to pay the remaining $11,000 himself.
After listening to Louise’s story, I had a pretty good idea of what might have happened. I explained that I thought the Association may have purchased a Basic Dwelling Fire policy for the condo units. That would cover the structure for Fire, Lightning, Hail and Windstorm. They may have even added Extended Coverage which would give Explosion, Smoke, damage done by a Vehicle and just a few other coverages. They may or may not have added Vandalism to the coverage, but if I was right, then things like collapse due to weight of ice or snow, damage from falling objects, discharge of water and all other causes of loss were not covered. I told Gerry, he could find exactly what the Association covered in his bi-laws. I also told him that many times an Association would cover only the outside shell of a unit and not the inside, the unit owner is responsible for drywall, flooring, cabinets, fixtures, etc.
Louise asked what could be done. If a condo owner’s policy only covered their personal property how would they protect themselves. I was happy to tell her that we could add as much coverage as they needed to insure any part of the condo that they were responsible for, or even all of the condo for the types of losses the Association’s policy didn’t cover.
Hearing this, Gerry was relieved and even smiling. I suggested that they make an appointment to come back in once they reviewed their bi-laws and had the information I asked them regarding the materials inside the condo. We could then sit down and figure out what the Association offered and what we needed to add to his policy to properly protect him.