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A little while back, a fellow parishioner stopped me before church services.

“You’re an insurance agent, aren’t you?” she asked.

“Yes I am”, I replied.

“I have a question”, she began, “I live in a condo.  While I was at work last week, a pipe burst in my unit on the second floor.  The water must have run for some time.  There was damage to the walls, the floors, carpets and my first floor ceiling.  The total damage is over $30,000.  The condo association says it’s my responsibility”.

 “Do you have coverage for the structure?” I asked.

 “That’s just it. I called my agent, and he said I only have $5,000.  How can that be?”

Whether you are new to condo ownership, or you’ve lived in one for years, this scenario is a risk that could mean financial disaster if not correctly handled.

Unfortunately, many people are under the assumption that because the condo association owns the building, insurance is handled the same way.  However, the definition of “ownership” may have little to do with insurance.

In general, the association insures the “exterior” and you insure the “interior” as well as your belongings.  It seems pretty simple, except for one thing.  How does one define “exterior” and “interior”?

This can vary greatly from one condo association to another.  Sometimes, the interior is defined as “the perimeter drywall; in”.  Sometimes it’s the “interior of the exterior wall; in”.  Other times, I’ve seen agreements say the association is responsible for the entire unit (exterior and interior) except for improvements and updates.

So, how much dwelling coverage should you purchase in addition to your belongings?  Well, the first thing to do is start with your Condominium Association Agreement.  Take a look at the section that covers insurance.  That is where you will likely find the best description of your responsibility.

Okay, now we know what you are required to insure.  In this example, we’ll assume the agreement says you must insure from “the perimeter drywall, in”.  This means you must insure all interior walls, flooring, cabinets, doors, plumbing fixtures, plumbing, molding, (and more). 

Does your unit have two floors?  Then, don’t forget the stairs, and the actual floor between the two stories.

Remember, this is in addition to your personal belongings, and it is usually a separate line item on your insurance policy.

So, how do you put a dollar value to it? Contact a knowledgeable insurance agent.  He/she can assist you in creating an accurate assessment of reconstruction costs based on your needs.  A good agent will also review your situation to determine if there is any additional coverage you may need (such as backup of sewer and drain, scheduled jewelry, etc.). 

It’s also the time to apply all the discounts you qualify for (senior discount, multi-policy, age of roof, loss free, etc.).    

Ultimately, you make the final determination on the amount of condo insurance to buy.  However, consulting with an experienced insurance agent will give you the peace of mind in knowing you’re getting the best possible coverage at the best possible cost.  

Regis Coustillac, CIC

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