Specialty Insurance Coverages for Your Condo
We all know about the standard insurance coverages for associations. At the bare minimum, you need to insure your complex with a condominium master policy, and it would be wise of you to invest in D&O and crime (fidelity) coverage for your association.
While the essentials truly are essential, have you thought about the specialty insurance coverages that you hear less about? Should they be long forgotten, or is the devil you do not know still a devil?
Add-ons and Loss Provisions
Trustees often assume that the master policy contains everything essential for insuring an association. However, the little things, such as flood and earthquake insurance, are not included on a standard policy and must be included in order for those losses to be covered.
While Massachusetts is not considered a high-risk flood zone, we’ve had a few messy storms this year that caused the ocean to flood nearby condos along the coast. If a common area gets ruined, the basic master policy won’t cover the damage. As for unit owners, they would need to buy flood insurance, but it won’t be written on the HO6 policy. Instead, it will be standalone coverage. In general, the board may need to educate their unit owners on the importance of the HO6 policy because many do not have it, the by-laws don’t require them to have it, and they mistakenly think that the master policy will cover it.
Moreover, you might want to think about adding loss provisions to your policy. If your complex floods and unit owners are forced to vacate, you won’t have anyone paying rent. The money needs to be made up somewhere.
Checking Building and Property Values
The complex should be appraised every few years so that the limits on the master policy match the cost it takes to rebuild. Some people are overpaying while others are underpaying their premium. If a disaster happens, and the damage to rebuild exceeds your limits, you could be paying out of pocket!
Terrorism Insurance
Today’s current climate is often a dangerous one. With countless bombings and shootings, you can’t skimp out on terrorism insurance for the association. Different from an act of war, incidents that are certified by the federal government as a terrorist attack are covered under terrorism insurance and not under your general policy. If you don’t have it, your losses will not be covered, and the expense to rebuild could be astronomical!
Snow Removal Coverage
While winter is behind us, snow removal coverage is particularly important for New England condominiums. If the budget gets maxed out, many associations choose to assess the unit owners a supplementary condo fee to make up the deficit. This causes unit owners to become disgruntled and may hurt the morale of your association in the long run.
Snow removal coverage pays out when the budget is exceeded and also helps in situations where the amount you budgeted for snow removal was too much and not enough snow fell.
To learn more about specialty insurance coverages, give H&K Insurance a call at 617-924-5600 or fill out this handy quote form, and I’ll reach out at a time convenient for you!
