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It can be very confusing to navigate condo association insurance policies if you don’t know much about it. However, it’s a crucial part of living in a condo, particularly with other owners.
It’s essential to have insurance coverage in case of unforeseen circumstances, which always happen when it’s least expected.
Here’s a quick guide about insurance for condominium associations. Once you have a basic understanding, it should be much easier to take the necessary steps to protect yourself and your brand new condo.
1. Condominium association insurance only deals with common areas
The first thing to remember is that condo association insurance policies only deal with what’s considered a general common area in the building. The good part is that it provides comprehensive coverage for both property and liability claims.
Once the sale on a new condo is officially closed, the tenant should receive something called a certificate of insurance that proves the coverage is valid and in effect.
2. There are many different types of insurance available
Another benefit of condo insurance is that it provides coverage for many different occurrences or eventualities. Some of the different types of coverage available include:
— Fidelity liability
— Worker’s comp
— Bare walls coverage
— Single entity
— General liability
— Director’s and officer’s liability
— Personal property coverage
3. Take the necessary steps before filing any type of claim
Once there’s an emergency, the most important thing to do before filing a claim is to reduce the amount of damage. For example, if there’s flooding, be sure to shut off the pipes to mitigate the amount of water damage.
It’s vital to be proactive against these types of damages instead of being reactive. Instead of pointing fingers or laying blame, try to gather all the facts and circumstances without bias. This can be valuable information in the event of a lawsuit.
Once the board has the actual claim, it needs to be forwarded promptly to the insurance company.
4. It doesn’t cover third-party injuries or damage
A condo association does not cover or pay for any personal liability that occurs due to bodily injury or injury to a third party. For example, let’s say a guest has a housewarming party to celebrate their new condo. One of the guests falls and breaks their arm. A personal insurance policy can help cover those expenses, particularly if there’s litigation or a lawsuit is filed.
5. You’ll need a supplemental plan
This critical part goes hand in hand with condo insurance not covering bodily injury or third-party injury. A supplemental plan can help fill in those coverage gaps in the condo association’s policy. Look into getting liability insurance, replacement cost coverage, and loss assessment coverage as well.
6. Take the time to read the fine print
This key point can apply to any type of insurance policy or even any legally binding contract. Always read the fine print. Many policies can look like they offer total coverage and use terms like “general liability” and “property and crime coverage.”
However, once you dig into the fine print and legalese, it can contain terms and definitions that are slightly different from what you might think. It’s essential to read through everything thoroughly and ask for help defining the terms and conditions that you don’t understand.
7. Always perform annual policy reviews
This step is crucial. Scheduling annual reviews of a condo insurance policy help to ensure that there have been no important changes made. If there are going to be any changes, those need to be submitted to the insurance broker. Operational changes that aren’t disclosed can adversely affect coverage or the policy itself.
Final Thoughts
Condo association insurance can be complicated, but it’s a necessary part of living in a condo. There are many things that can happen: fire damage, injuries, or water damage, which accounts for almost half of every condo insurance claim filed.
These seven key points will help you gain a little bit of understanding and hopefully be able to successfully navigate condo association insurance policies.
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Man, these days there seems to be an insurance for everything. Companies are offering pet insurance as a part of their benefits package now, imagine they start adding condo association insurance as a part of their benefits package.