In our experience analyzing condo insurance policies, we’ve often found owners are not insured properly or lacking important coverages.
In this article, we’ll explain common complexities and mistakes to look out for when reviewing your condo homeowners insurance.
Insurance Agents Need to Review Homeowners Associations CCRs
Covenants, Conditions and Restrictions (CC&Rs) are documents created by the homeowners’ association that lay out the various regulations, commitments and agreements that a homeowner abides by when purchasing a property. It’s imperative for insurance agents to closely review CC&Rs, or they won’t know what the unit owner is responsible to insure.
We’ve seen many instances where an agent doesn’t analyze the document thoroughly, and the homeowner later finds that they’re lacking coverage or missing important coverages until they try to file a claim.
Agents need to examine the insurance requirements section in CC&Rs, which should spell out exactly what the unit owner is responsible for. We’ve seen some CC&Rs where the owners are responsible for their garage doors, roof, balcony or patio, or even window coverings.
NHC’s California agency insurance services are available as a resource for residents to examine their CC&Rs and better understand the additional condo insurance coverage they CC&R, send them our way. We’ll look at policies for your referrals who are looking for an independent broker to review and advise on their condo homeowners insurance coverage.
The Difference Between a “Bare Walls” Policy and a “Walls In” Policy
One of the most important things to be aware of when it comes to condo homeowners insurance is whether your location’s policies are “bare walls” or “walls in.”
“Bare walls” mean the association is covering the structure of the unit into the interior, up to the drywall. Things like cabinetry, toilets, sinks, counters, flooring, plumbing and electrical must be insured by the individual unit owner’s condo insurance policy. That’s a lot for the owner to be responsible for, especially if it wasn’t included in the coverages quoted.
“Walls in” covers the interior up to the drywall, but now most likely the cabinetry, toilets, sinks, counters, flooring, plumbing, etc are now included in coverage by the Association— not as much “additional” coverage is needed with this type of policy. Its more comprehensive, and much less common these days.
Even with a “walls in” policy, your agent still needs to review the CC&Rs page-by-page to ensure the essential coverages are offered. If they’re not, the unit owner will need to add certain needed coverage’s to their individual condo homeowners insurance policy.
Again— if you’re unsure whether your condo is insured properly, NHC’s California agency insurance services are available to review and help you locate any additional coverages needed.
Common Mistakes Made with Condo Insurance Policies
Understanding the ins and outs of condo homeowners insurance is complex, and we know that better than anybody. We see many common mistakes from unit owners that put them in vulnerable positions when it comes to their condo insurance coverage. Here are a few:
- “The association pays for everything, so I don’t need coverage”
Even if the unit owner has very complicated CC&Rs that afford the most comprehensive coverages offered, there’s still a policy needed by the unit owner. Additional coverage is still needed, such as:
- Coverage for your contents
- Coverage for personal liability
- Loss of use coverage to live somewhere else during repairs
Until you need to file a claim, you might not know that your coverage is lacking.
- No Loss Assessment Coverage
Here’s an example: say there’s a fire in the common area of the condo complex. The association’s policy is going to take care of that damage (subject to the deductible) and then they will assess each unit of their pro-rated portion of whatever the association is paid out of pocket.
50k in coverage for this scenario costs about $20 per year. There’s no reason for this coverage to ever be left off, except that an inexperienced agent or one rushing through the process leaves it out.
- Coverage for the Interior of the Unit is Limited
The final mistake we’ll address is when it comes to condo homeowners insurance: coverage lacking for the interior of the unit, or only existing due to the automatic 5% of your content’s coverage limit that is extended to coverage for the interior of the owner’s unit.
The bottom line, if your referrals haven’t had their CC&Rs reviewed, direct them to NHC’s California agency insurance services. We’ll review them to let you know where coverage is lacking, and then help you fill in the gaps with sound policies from top-rated insurance providers.
Top-Rated California Agency Insurance Services
NHC Insurance Services has access to all the resources needed to provide comprehensive coverage for condo owners. We strive to be a resource to those who are purchasing condo insurance or reviewing their current coverage.
As an independent insurance agency, we have access to numerous, highly rated insurance providers with a wide variety of policy options, which allows us to create customized personal and business insurance packages tailored to your specific needs and budget.
We can write a number of policies, including homeowners, condos, landlord, renters, auto and more. Contact us with any questions.