INSURANCE COVERAGE FOR UNIT OWNERS
We often get questions from Unit Owners regarding what kind of coverage and how much insurance they should purchase for their Units. Having insurance on your Unit is required, but sometimes it can get confusing as to who covers what, since the Association may also carry coverage on the buildings. Hopefully this article will help clarify what Unit Owners need to cover, but remember: when in doubt, contact your insurance agent directly.
Condominium owners should have an HO-6 policy. This is the standard condominium Unit Owners policy offered by most insurance providers. This is different than renters insurance and the two should not be confused. Unit Owners have to insure everything listed in their Declaration that constitutes a Unit—see your association’s Declaration for the complete description. By having an HO-6 policy, should there be a ‘total loss’ (i.e. fire), your policy will work in conjunction with the Association’s policy to cover the cost for restoring your Unit and refurbishing it back to your specifications. If you make an upgrade to your Unit in the amount of $10,000 or more, you should be sure to let your insurance agent know.
The Association’s policy usually covers the structure, in that the policy covers the rebuilding of the buildings and Units as specified on the original builder specifications filed with the County. If you’ve changed the interior configuration of your Unit, combining or dividing rooms, finishing your basement, adding an enclosure or completely redoing your kitchen or bathroom, your policy needs to account for it to be able to rebuild back to the upgraded quality you have now. Builder specifications are very basic, so the Association’s policy will not generally cover granite counter tops, or a finished basement.
Here are some tips for making sure you have adequate coverage for your Unit and everything in it:
Þ Check if you need coverage for water and sewer back up—this may not included on the Association’s policy.
Þ Document document document! Take pictures of your home’s interior, and keep those photos where they can’t be destroyed (i.e. on the Cloud like Google, not on your computers hard drive).
Þ Use a website like www.KnowYourStuff.org to keep organized and up to date records.
Þ Have your insurance agent visit your Unit and work out an amount of coverage together. Remember, what something is ‘worth’ and the cost to repurchase it new are not usually the same.
Nobody can determine your exact amount of coverage except YOU, so take an active part in making sure you’re adequately covered. Meet with your insurance agent. Take their advice. Know what is in your Unit.