Improvements and Betterments for Condo Owners

One of the great things about owning a home is being able to replace things you don’t like. Condo associations and unit owners find themselves in an odd place when it comes to this. While the outside of the condo cannot be changed and is owned and insured by the Association, the interior of the condo is by-and-large the unit owners to do what they see fit with. However, who is liable and insuring the interior of the condo differs depending on the master policy. Let’s look at exactly what improvements and betterments for condo owners are, and when and how they are covered.

What Are Improvements and Betterments?

When an existing part of a condo unit is replaced with something better by the owner, there is now a difference in the cost of coverage between the preexisting part and the new more expensive part that replaced it. This change might be outside the responsibility of the policy that would normally cover it, or may be the responsibility of the unit owner to cover. Meaning that any improvement or betterment made to the property may be insured by the Association fully, partially, or not at all. Learn more about Improvements and Betterments in this blog.

Your Type of Master Policy Affects Improvements and Betterments

As a condo owner thinking of replacing those Formica countertops or a Condo Association thinking about the differences in master policies, each type of policy affects what is considered part of the Association’s liability and covered under insurance. From bare walls to all-in, each provides a different type and amount of coverage. Let’s look at the differences.

Bare Walls Policy

Usually the least expensive, a “Bare Walls” policy covers only up to the drywall of any given unit – the structure of the condo. This policy doesn’t include finished surfaces or interior walls. Therefore any changes to those (such as new flooring or remodeling) aren’t covered under the master policy.

Builder’s Specs Policy

A “Builder’s Specs” only cover surfaces, walls, and fixtures that were originally built during the construction of the condo, and therefore only provides coverage to rebuilt to these original specifications in the event of a loss. Example: if a remodeled bathroom were damaged, the master policy would only cover rebuilding the bathroom to the original specifications.

All-In Policy

An “All-In” policy covers all interiors, walls, and fixtures of a condominium, though there could be exceptions. Covenants, Conditions, and Restrictions (CC&Rs) are legal documents that lay out guidelines for planned communities such as condominium complexes. While the most commonly known CC&Rs regulate exterior appearances of condos, some affect what the Association is required to maintain, repair, and replace internally. Those may mean that the Association is not responsible for repairing or replacing some or all changes to condo interiors that have been altered.

Whether you’re a condo owner or an association, this can be a complicated and convoluted liability to sort out. Let our condo insurance specialists help, from providing information on coverages on unit policies to complete master policies. Contact H&K Insurance today to get started.