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As with a single family home, the purchase of a condominium represents a significant investment – perhaps the biggest one you'll ever make. For this reason, it's important to provide adequate safeguards to protect your unit and its contents.
The best way to accomplish this is with comprehensive insurance.
Single Entity versus Barewall
Under the "single entity" concept, the condominium association is responsible for insuring the unit as it was built, minus any additions made by the owner or previous owners. The single entity concept essentially makes the unit owner responsible for insuring only his or her personal property inside the unit as well as any additions or alterations to the original structure.
The "bare wall" concept holds that the condo association has no responsibility to insure the unit inside the unfinished surfaces of the perimeter walls, floors and ceilings. Responsibility for such things as the kitchen cabinets, built-in appliances, interior partitions, plumbing, wiring, bathroom fixtures and wall and floor covering thus falls on the individual unit owner. In some cases, the owners of multi-story units are also responsible for the floors, stairs and ceiling between the lowest floor and highest ceiling.
Most condo declarations employ the barewall concept, meaning that you as a unit owner are responsible for the repair and maintenance of everything within your space.
It is important for you to familiarize yourself in state and local laws and the legal documents of your condominium association. With these in mind, along with the guidance of James J Sullivan Insurance Agency, you will know thoroughly understand your insurance coverage.
Insurance for the Unit Owner
Individual unit owners in a condominium development can obtain insurance coverage through the purchase of a standard product used by most insurance companies called a HO-6 policy. This policy provides coverage up to a specified amount, minus depreciation, for your personal property (clothing, furniture, household appliances, etc.) and liability coverage up to a specified amount. The policy also provides coverage up to a specified amount on dwelling items as defined by the policy.
Obtain Adequate Coverage
As a condominium owner, you should take care to make sure that you have enough insurance to cover all losses to your property. To help determine your precise insurance needs, we recommend that you take a household inventory. This will not only help you in arriving at an appropriate amount of insurance, but will also assist you in making a claim in the event of a loss.
Deductibles
You'll find that most HO-6 policies have a $250 deductible on property coverage, meaning that the insurance company pays for all covered claims over that amount up to the limits of the policy. You can reduce your condominium insurance premium substantially, sometimes by as much as 20%, by opting for higher deductibles and assuming more of the financial responsibility for a covered loss yourself. Some higher deductibles commonly available to unit owners are $500, $1,000 and $1,500.
Perils Covered
Damage from fire and lighting; windstorm or hail; explosion; riot or civil commotion; aircraft or vehicles; smoke; vandalism or malicious mischief; theft; falling objects; weight of ice, snow or sleet; accidental discharge such as overflow of water or steam from within a plumbing, heating, air conditioning system, or household appliance; and freezing of a plumbing, heating or air conditioning system or household appliance.
Damage from the following perils is excluded under the HO-6 policy; earth movement; power failure; neglect; war; nuclear hazard; and flooding.
James J Sullivan Insurance Agency will provide you with a complete listing of the perils covered and not covered by a HO-6 policy.
Flood Insurance
Although no endorsement is available to protect against damage from flooding, the Federal Government passed the National Flood Insurance Act in 1968 to provide coverage for those living in flood-prone areas. Check with us at James J Sullivan Insurance Agency if the area in which you live qualifies for this coverage.
Points To Remember When Buying Condominium Insurance
- Determine your insurance responsibilities as a unit owner
- Establish the value of your property
- Obtain adequate insurance to cover losses on all property through individual policies
- Be aware of policy limits and exclusions and consider purchasing supplemental coverages
This information is intended to give you a basic overview of condominium insurance. Certain conditions and exclusions apply in specific cases, and some coverages have specific dollar limits. These conditions and exclusions are detailed in the policy itself.
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