3 Things to Help New Condo Owners Understand Their Insurance

As a condo association board member, it’s important to start off on the right foot with your new condo owners. One way to help them assimilate is by ensuring they are properly educated on the Condo’s policies. Though not the most exciting subject, it is important to thoroughly explain your insurance policy. While some new owners may know what questions to ask from prior experience, many will need you to fill in the details where their knowledge is lacking. Here are three key areas you should cover with them.

1.      Explain the Master Policy

Each condo association has a master policy. Although most new condo owners will probably ask about your association’s policy, those who have never owned a condo before may not be familiar with the basics. It’s important they understand whether the policy is “bare walls-in” or “all-in” and what the difference is. This affects how much additional insurance coverage they will need to buy.

2.      Condo Association Deductibles

A large part of the condo association insurance is the commercial insurance which covers the commonly shared buildings and adjoining common areas. These policies normally have an association deductible, although there are some exceptions. If a natural disaster such as a tornado, earthquake, or hurricane were to do extensive damage to the condominium, the policy will explain how that is handled. Any major repairs or damage to the structure of the condo association will cost the condo owner their deductible when the commercial insurer covers the losses. The policy’s deductible is typically split equally among the unit owners (so if there are 10 owners, they would each pay 10%).

3.      Which Party is Liable?

It’s very important to lay out clearly how it is determined which party (the association or the unit owner) is liable. Money is a very touchy subject and proper communication can help avoid disputes. The liable party (who ends up paying the damages) is essentially determined by the location of the injury. If the injury occurred in what is known as “common grounds” the association will almost always be liable. A parking lot is a good example of a common ground. “Limited common ground” is usually “owned” by more than one, but less than all unit owners, a hallway would be a good example. Generally, “common ground” rules apply to these areas, although there are some exceptions. If the injury occurs on “unit property” the owner is liable. A private living room is a good example of that. Make sure your new owners understand these parameters.

If you are preparing a packet to give your new condo owners, these three things should be covered clearly. As a board member responsible for your property, it’s vital to protect your association from liability by being properly insured and by educating your members. Covering your bases beforehand can save a lot of potential headaches and confusion if something does happen. If you are interested in learning more, having your policies reviewed, or speaking to an expert, contact the H&K Insurance Agency.  We would love to explain the necessary coverage and policies for New England condos.

Brendon Kilcoyne is a licensed insurance agent who has been with H&K since 2003, who specializes in providing risk management for condominium associations and apartment complexes. He has obtained the designation of Certified Insurance Counselor (CIC) and is an active member in both CAI (Community Associations Institute) as well as IREM (Institute of Real Estate Management). Along with access to his expertise, he can provide you with direction in determining what kind of program best suits your needs.