Tina Kawar, a friend from Liberty Mutual Insurance, was talking about some the problems people face when insuring a condominium. Since we have a lot of condos in downtown Phoenix and a lot of clients with condos, we asked Tina to offer some of her sage wisdom when insuring your condo in downtown Phoenix, AZ. Make sure you read about the loss assessment coverage. This bit of info was news to me.
Best to you… Gene Urban, The Urban Team at Realty Executives
Many people today are looking at condominiums as a great alternative to purchasing a home with the cost to up keep and take care of things being less it makes sense. However, condo insurance is a bit more complex than a single family home; let me fill you in on some background to help make sense of it all. There are questions you need to ask yourself when it comes to making sure you are properly insured.
The first piece of information you need to get a look at is the Master Insurance Policy held by the Homeowner Association. When making the purchase this is a very important document because it will provide the information your insurance agent wants to determine the type of coverage you need. There are typically two types of policies carried by most Homeowner Associations, which are commonly referred to as Bare Walls or Walls In and All Inclusive Policies:
1. Bare Walls or Walls-In Master Insurance Policy– This type of policy insures the outside structure of the condo only. This type of policy puts the burden of repairing or rebuilding the interior of your unit from the studs in onto your individual condominium policy
2. Single Entity Type Master Insurance policy– This type of policy covers everything that conveys at settlement, including the carpet, the walls, the cabinets and fixtures. Some even cover any improvements or betterment that has been made to the unit, but not always, so this is when you would still require dwelling protection for any improvements made after the unit was originally built.
Next, you need to know that it is imperative that you understand that you still need your personal policy to fill in the gaps where the master policy does not cover, such as a deductible that YOU ARE RESPONSIBLE TO MEET before the Homeowners Master Policy will begin to pay, covering your personal property, and finally a liability protection that is adequate based on a discussion you should have with your agent.
You MUST always look at the Master Policy to determine the amount of Loss Assessment Coverage necessary to cover the deductible the Homeowner Association makes you responsible to payout prior to them beginning to allow the insurance policy to cover damages. This deductible typically begins at $5,000 and goes up from there. This Loss Assessment coverage will be a saving grace for you in the event of a claim you have to file with the Homeowner’s Association Master Policy or if there is an event that occurs in a common area that is the liability of you a member of the Homeowner Association, that then begins the burden of all of the homeowner’s to cover a portion of the cost. (http://www.libertymutual.com/home-insurance)
Finally, all lenders require that you have the appropriate policy prior to closing, but more importantly you want to be an educated buyer by asking the right questions to protect you, your family, and your investment. (www.efanniemae.com)
If you have a question for Tina or want a quote, she can be reached at: