Thu, 27 March 2008
March 27, 2008
“Take this very common situation: a common-element pipe burst, causing major flooding damage throughout the building, including in your unit. The condominium association files its claim against the master policy, and you file your claim with your insurance company. However, each company points it’s finger at the other one, stating that it is the obligation of the other carrier to cover the claim. Often, when faced with this situation,one expert merely tells both agents: "Guys, both the master and the HO-6 policy were issued by the same company, so why not just work it out on your own, and make sure that both the association and the owner are properly compensated for their losses?"
If you own a condominium unit, learn the difference between a unit and the common elements. Remember we often say a condo is the space, the area between the floors and the walls. Common areas are elevators, hallways, roof mechanical equipment, parking garage. And further, consider the pipes that serve only your unit will most likely be considered part of your unit -- even though those pipes go down the walls outside of your unit.
It is important that you understand these concepts. Your association declaration will provide you with this information, but if you get confused with the legal (and architectural) terms, consult the association's property manager, its attorney or even the insurance agent for your building. It is absolutely critical for every owner to carefully read -- and reread periodically -- these legal documents.
If you are renting your unit, you probably will not need protection for your tenant's personal property. However, you still need coverage in case someone gets hurt in your unit, and accordingly should still obtain the HO-6 policy. And you should make it a requirement in your lease that your tenants purchase "renters insurance" -- called an HO-4 policy -- so that they too will have protection in case problems arise.
Damage to condominium units can come from many sources. The hot water hoses in your washer can burn out. Your fireplace chimney can get stuffed up, unable to provide the necessary updraft. Or the rubber seal under your toilet gets worn down.
One never knows when these problems occur. More importantly, disasters are often out of your control. The cost of this insurance is nominal, considering the risk and the exposure involved.