For some people, insurance is something they don’t really think about. Or they don’t think they need it – until it’s too late.
When a loss occurs, those with insurance coverage are usually relieved and thankful. On the other hand, many wish they had purchased more coverage – or purchased any at all. Their regret is palpable, as they often lament, "If only I had known!"
Which leads us to ask: Is ignorance truly bliss?
Millions of homeowners in condominium and townhouse communities do not have homeowners insurance. Many mistakenly believe that the association’s insurance is sufficient to protect them. It's only after a loss they realize, too late, "I didn’t know I needed additional coverage because the association has insurance."
Yes, the association does have insurance, but it’s primarily in place to protect the structures and common property owned by the community. It also covers liability for the common areas.
That means each homeowner needs personal insurance to cover liability within their own unit and to protect their personal property. Appropriate coverage also provides for loss assessment, loss of use, and any improvements or upgrades made to the unit.
In most communities, the association's insurance policy carries a deductible of $1,000 to $2,500 for a covered loss to an individual unit. This deductible can be assessed to the homeowner, but if the homeowner has the right insurance, they can submit this deductible to their personal homeowner's carrier, which often has a much lower deductible—typically $250 or $500.
Homeowners
If you own and live in a unit where the association provides coverage for the structure through a Master Policy, you should have an HO-6 Condominium Homeowners Policy with an HO-32 Special Coverage Endorsement. This policy provides the necessary coverage for liability, personal property, loss assessment, loss of use, and any improvements or upgrades to your unit.
Owners/Investors
If you own a unit for investment purposes, you need a Combination Dwelling Policy. This policy provides personal liability protection as the owner, along with coverage for any additions, alterations, loss assessment, and loss of rental income.
Landlords
Be sure to include a clause in your lease agreement that requires renters to maintain personal liability insurance, naming you as an additional insured.
Renters
As a renter, you should protect your personal property, betterments, improvements, loss of lease, and personal liability with an HO-4 Tenant Homeowners Insurance Policy.
We strongly encourage every homeowner to review their personal insurance coverages with their insurance agent and to coordinate these coverages with the association’s agent to avoid any gaps in coverage. Don’t end up in a situation where you have some protection, but wish you had more.
