Woman catching water in leaky ceiling

Insurance Claims: What Every Condo Owner Should Know

All homeowners dread pipe bursts, roof leaks, oven fires, storm damage, etc. but unfortunately, they happen. When living in a condo, high rise, multifamily, or townhome, you share walls and common space and need worry not only about your own home, but your neighbors’ as well. Understanding insurance and the claims process, and following the protocol of your property management company, will help insure a smooth and expedient resolution to your damages.

Understand Your Association Insurance

It is important to differentiate when a claim falls under your association policy and or falls under your own homeowner policy. While your condo board is responsible for arranging your master policy, it makes sense to find out exactly what it covers. That way you know about any potential gaps in coverage you will need to fill.

Depending on the type of master policy, it might only cover: 1. The exterior structure of the building
2. Collective areas shared with fellow condo owners in your building, such as the basement, roof, elevator, lobby, swimming pools, and walkways
3. The land on which the condo is built.

There are also different types of master policies:

Bare walls coverage

This type of master policy only covers the ceiling, floor, and walls. It can also cover furniture and fixtures in the common areas. You can think of it as protecting the shell or skeleton of your condo.

It means that you are also responsible for everything else: the plumbing, wiring, lighting fixtures, and kitchen cabinets.

Single-entity insurance

This type of policy is an extended version of bare walls coverage. But it covers built-in fixtures too.

The condo association is responsible for covering your condo as it was originally built. So, if there’s damage from an accident or a disaster, your condo will be rebuilt to its original condition.

All-in coverage

This is the most comprehensive, heads-to-tail coverage. It protects collective property or property that is part of the structure of condo, plus any improvements and additions made to the condo.

How can you find out exactly what a master policy covers? Check your association’s bylaws. If you’re having trouble finding it, ask your condo board, property manager, or your insurance rep.

How Much Money Can I Expect from My Association Insurance Claim?

If your association is deemed primary in the claim, they will have an insurance adjuster inspect the damages. He or she will determine the amount of money needed to repair the damages. It is important to note that this estimate most often is the amount of money needed to restore your property to its original finishes. Thus, if you have upgraded kitchen cabinets or changed out laminate flooring for hard wood, the claim will reflect the cost of the original products, not of what is there now. Once determined a check will be issued to the Association less the deductible and deprecation.

Boards often weigh the cost of lower building premiums with higher deductibles. A large building can have a deductible ranging from $5,000 to $10K or more. It is important to know what your deductible is.

Depreciation is monies held back until the restoration is complete. This is so the insurance company can verify that the monies were used to truly fix the damages, and not for other expenses like bills or vacation. You will receive this money only after you submit pictures, or the adjuster returns to your home to inspect the work done.

So, as a homeowner, the money you receive will be less the deductible and sometimes not enough to cover upgrades. So how can you try and recoup some more of these monies?

You can go to the Board and see if they would be willing to reimburse the deductible out of the association budget.
You can submit the remainder of your shortfall through your own homeowner’s insurance policy.

Follow Protocol

When dealing with an emergency, it is very easy to quickly pick up a phone and dial a handy man to come out and fix the problem. However, management companies and Boards have processes and bypassing them can result in a delay in getting your money.

When an emergency happens:

Notify your property manager immediately. If off hours, most management companies have an emergency line. Know what that is!
A property manager will then be able to tell you whether the claim should be submitted through your association policy or through your own. Regardless, the property manager will then notify the Board of the incident and if necessary, call the Association’s insurance company to submit the claim. At that point, you will be contacted by the insurance adjuster who will set an appointment to assess the damages.
3.Then the work can begin. The property manager will call approved and insured vendors to start the repairs. It is important that all workers doing work on your unit are properly insured. That is why your property manager should always be involved. If they are NOT properly insured and you have gone outside the process, the Board could withhold the insurance monies due you.

Home emergencies that involve insurance are upsetting and frustrating. Most owners wish to restore damages as quickly as possible. The best way to do this is to be educated about your association insurance, understand your rights and follow your HOA’s processes. Of course, patience is important as well.