by Phillip B. Burum, Executive Vice President, Diversified Pacific,
President, Building Industry Association (BIA) Baldy View Chapter
Homeownership, whether a single family detached home or multi-family attached home, comes with a great many benefits and a seemingly equivalent amount of responsibilities. As a renter, you are free to leave the responsibility for upkeep, appearance and insurance up to your landlord. But, once you make the choice to invest in your future and own a home, those responsibilities are yours. As with upkeep and appearance, the appropriate insurance coverage is generally a matter of personal choice based on an individual’s financial situation and risk tolerance.
If your version of the American Dream comes in the form of an attached home, the choices and requirements for insurance may be a bit different. Condominium Owners Insurance is a Property & Casualty product that offers many of the same benefits as single-family homeowner policies to owners of condominiums (‘condos’), townhomes and cooperatives (co–ops). These policies offer similar levels of protection against disasters, damage to property and personal liability or legal responsibility for any injuries and property damage owners or members of their family cause to other people (including damage caused by household pets).
There are key differences between homeowner’s and condo coverage however, that need to be addressed by a knowledgeable insurance agent or broker. For that reason, it is important to locate and seek counsel from an experienced condo insurance broker. If a condo owner or prospective condo owner’s current agent doesn’t specialize in condo insurance, owners should ask for a referral of seek a qualified agent on their own. It is also worth considering insuring their unit with the same company that underwrites their building’s insurance policy as it may result in an additional reduction in premiums and help avoid gaps in coverage.
The California Department of Insurance (CDI) offers a wealth of information regarding homeowner’s coverage at its www.insurance.ca.gov website. In addition, the CDI offers a consumer hotline staffed by insurance experts at 1-800-927-4357 and online.
To properly insure a condo, owners need to know which structural parts of the unit are covered by the condo association. This information can generally be found by reading your association’s bylaws. If there are any questions, they should by answered by the association manager or association’s insurance agent. Understanding what is insured by others and what needs to be insured by the individual is a crucial first step in examining your policy options.
Condo owners generally have two separate policies to protect their investments. The Personal Homeowners Policy provides coverage for personal possessions and some structural improvements. The second is the Master Policy provided by the condo association. This policy covers the common areas owners share with others in the building, but some associations add a degree of coverage for even the individual units, which is why it is important to fully understand the existing coverage before obtaining your specific homeowner’s policy.
In addition to a standard homeowner’s policy, owners should inquire about the following additional coverages:
Unit assessment - This reimburses owners for their share of an assessment charged to all unit owners as a result of a covered loss. For instance, if there is a fire in the lobby, all the unit owners are charged the cost of repairing the loss.
Water back-up - This insures the property for damage by the back-up of sewers or drains. Water back-up may not always be included in a policy. Check to see that it is included.
Umbrella liability - This is an inexpensive way to get more liability protection and broader coverage than is included in a standard condo policy.
Flood or earthquake policies - Owners will need to purchase separate flood and earthquake policies. Flood insurance is available through FEMA's National Flood Insurance Program at www.floodsmart.gov and www.insurance.ca.gov offers an excellent resource for earthquake insurance.
The decision to own your own home was the first step in securing your financial future, obtaining proper insurance coverage and protecting your investment against a loss must be step two.
The BIA Baldy View Chapter seeks to advance the opportunity to attain the American Dream of home ownership. For additional information on the benefits of homeownership, go to www.biabuild.com on the web.