Choosing the right insurance coverage is an important way to protect your investment in a condo. Coverage elections can considerably reduce your exposure to unique risks that are part of condo living.
Exclusions in the Association’s Coverage
The insurance coverage that a condominium association carries typically includes damage to the common areas of a building. Damage to the interior of residents’ units is usually not within the scope of an association’s property insurance policy. For the most part, residents need to carry their own property insurance in order to protect the value of their unit and its contents.
Damage That Is the Association’s Fault
A unit owner in a condo building could ostensibly incur damage that results from the association’s failure to maintain a common area element. A roof leak or a broken riser, for example, can cause costly damage. In these instances, the only recourse of an owner without insurance would be to initiate a liability claim against the association. An owner who has condo insurance can seek a remedy with his or her own carrier, and the carrier can pursue restitution from the association’s general liability insurer.
Ultimately, insurance coverage is an essential financial safeguard in condo ownership. Unit owners must choose their coverages carefully.