1. 1. Condominium Insurance Sean Ponder East Tennessee District Underwriter
2. 2. Ponder This Condo Association by laws and how they impact the coverage needed Building, Additions and Alterations coveragecoverage Loss Assessment Coverage How much coverage is needed?
3. 3. Condominium Association Condominiums have unique insurance needs because each unit owner owns a portion of the building. In this sharedIn this shared ownership situation, condominium residents will form a condo association or a condo board to oversee the management of the property.
4. 4. Bylaws and Articles Each condo association is governed by a set of bylaws or articles. They provide policy requirements for deductibles, limits of liability and the depth of protection for personal injury and property claims. of protection for personal injury and property claims. Condo owners are entitled to review their bylaws and associations insurance policy. Condo owners need to be aware of their level of responsibility so they can make informed decisions when considering condominium insurance.
5. 5. The Master Policy Every multi-unit building needs a master policy The condominium building master policy must cover two key risks: General Liability and Property (common areas). Some states have statutes in place thatSome states have statutes in place that specify the scope of insurance coverage that the association master policy is required to maintain. Other states rely on the association condo documents to establish the insuring responsibility of the unit owner and the association.
6. 6. What does a condo master policy cover? Standard Coverage General Liability- This covers the condo association from a liability standpoint. A classic example is the "slip & fall", where someone is injured on the premises and files a lawsuit. With a master policy you will have liability protection. The coverage amount for liability can vary, but is often $2-5 million dollars.is often $2-5 million dollars. Property - This provides coverage for the common areas of your condo building, including the exterior of the building (studs to outside walls), hallways, elevators, sidewalks, landscaping, the roof, basement, pools and building equipment. Much like a homeowner policy, these items need to be covered for a condo building. The joint ownership aspect of a condo building requires this to be covered with a master policy.
7. 7. Common Areas Walkways Pool Gym Parking Lot or Garage
8. 8. What is the unitWhat is the unitWhat is the unitWhat is the unit owner responsibleowner responsibleowner responsibleowner responsible for ?for ?for ?for ? - Personal property -Interior of the unit-Interior of the unit - Liability, which covers the actions of condo owner, pets and family members living with the condo owner.
9. 9. NationwideNationwideNationwideNationwide Condominium policiesCondominium policiesCondominium policiesCondominium policies provide the followingprovide the followingprovide the followingprovide the following coverages and a fewcoverages and a fewcoverages and a fewcoverages and a few othersothersothersothers Personal PropertyPersonal Property Buildings, Additions and Alterations Loss Assessment Additional Living Expenses Liability
10. 10. Coverage A Personal Property Imagine if you were to pick up your condo and flip it upside down, all the belongings that fall out would be considered personal propertypersonal property Personal property includes all the possessions a condo owner would take with them if they moved out or sold the property.
11. 11. Coverage B Loss of Use Additional Living Expense covered living expenses that is incurred if a loss requires to leave the residence Fair rental Value covered rental value if a loss requires a tenants to leave theloss requires a tenants to leave the residence Prohibited Use covered additional living expense and fair rental value if a civil authority prohibit the use because of direct damage to a neighboring premises by a covered peril.
12. 12. Coverage C Loss Assessments A unit owner could be subject to an assessment made by the association for certain losses that are not covered under the associations master policy. Under the condo associations bylaws, eachUnder the condo associations bylaws, each owner will be assessed a proportionate share to cover major property and liability losses of common areas. Ex: common area destroyed by a windstorm, tornado, hurricane, etc. The standard coverage for loss assessment is $1,000, but higher limits may be available.
13. 13. Buildings, Additions and Alterations This includes coverage for a walls-in policy. Building Coverage provides compensation to rebuild your condos interior (including drywall, paint, flooring, baseboards, fixtures, cabinets, sinks, fixedbaseboards, fixtures, cabinets, sinks, fixed appliances, etc.). Some HOAs hold the owner accountable for interior upgrades and will replace the unit in the building back the condition you originally bought it (minus any upgrades).
14. 14. How much coverage is needed? Find out what the HOA's policy covers Assign a dollar amount to the personal items Estimate the amount the member wouldEstimate the amount the member would need to repair or replace the interior structure by creating an MSB profile using Condo as the style (wall in). Contact your underwriter with additional questions.
15. 15. Example of a Condo MSB Profile