Updated: 11/4/2010 9:00 AM ET|
Insurance worries for condo owners
Your answers to six crucial questions can help guide you to the coverage you need -- and help you steer clear of buying coverage that your condo association already has.
To state the obvious, a condominium is not the same thing as a house. Usually, there's no backyard or basement, and you don't have to worry about cutting the grass or shoveling the front walk.
Insurance is another area where homes and condos differ. Condo owners are typically responsible for insuring just a portion of their property on their own. However, rules differ from complex to complex, and it's important to ask the right questions to ensure you have proper insurance coverage.
Here are six things you need to know about insuring your condominium:
What does your master policy say?
Owners of condominium units obviously do not own the entire complex. Typically, they own their own unit outright and share ownership of the rest of the complex with all the other owners.
From an insurance point of view, that means all individual unit owners have a collective responsibility for insuring areas of the complex owned in common -- building exteriors and hallways, the pool area, etc. A condominium association typically collects monthly dues from unit owners and uses a portion of these funds to insure common areas.
Meanwhile, the unit owner typically is responsible for separately insuring everything within the four walls of his or her individual unit.
The condo association's master policy, as well as association rules, should spell out clearly which parts of the complex are insured through association dues and which parts are not.
There are two broad categories of master policies, says Steve Slattery, a property underwriting manager for Liberty Mutual Group in Boston:
- Bare walls in. These policies cover all real property from the exterior framing inward but do not cover fixtures or installations within a condo unit. Features such as countertops, bathroom and kitchen fixtures, and flooring are not covered. If your condo association has this kind of master policy, you'll probably have a greater need for individual coverage, according to Slattery.
- All in. These policies cover fixtures, installations or additions within the interior surfaces of the perimeter walls, floors and ceilings of individual units. Condo owners under an all-in plan will probably have a more limited need for individual coverage, Slattery says.
There are also variations of the two types. These details should be spelled out in a condominium association's bylaws.
"Most bylaws will talk about anything within the four walls of the unit you own," says Matthew Cullina, the director of product management for MetLife Auto & Home in New York. "Everything else is owned by the condo association ownership. Knowing specifically what you own when you buy that condo is the first thing I recommend."
How much is the association deductible?
Condo association insurance typically includes commercial insurance coverage for the commonly shared building and common areas. Such policies typically have an association deductible.
"Basically, in the event of a natural disaster or hurricane or whatever, it is spelled out in the policy," Cullina says. "If the condo association needs major work or there is major damage to the structure, the condo association will tender the claim to their commercial insurer, and they would get covered for their loss.
"But there would be a deductible, and that deductible would be assessed against all unit owners -- so if there are 10 unit owners, it would be divided 10 ways."
VIDEO ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
Children from lower income families are at greater risk of suffering accidental injuries and being sickened by food, according to a Consumer Federation of America study.