The ABC’s of Insuring Your Condo Common Terms and Options for Insurance

Sometimes insurance and the terms that accompany it can feel like a completely foreign language. It can be mystifying and overwhelming, whether for individual condo residents or the board members who oversee the community as a whole. The insurance industry uses a tremendous amount of shorthand, and the degree of coverage has seemingly grown exponentially in the last couple decades. With lawsuits and other forms of legal recourse now just a common reality of life in condos and HOAs, board members and property managers need to be diligent about what kind of insurance coverage they have and require.

Knowing and understanding the key terms and concepts behind complete, well-designed insurance coverage can go a long way toward peace of mind and making sure that should the worst happen, homes and assets are protected.

Common Terms and Concepts for Owners

For typical homeowners and condo unit owners alike, the HO-6 form is one of the more essential forms of insurance. It covers the contents and interior elements of a condo unit, versus the exterior of the building and its landscaping features, which are insured by the homeowners’ association through its master policy. The HO-6 policy covers personal belongings and the condo space itself from the traditional risks such as burglary and fire.

According to State Farm, loss assessment coverage is uniquely designed for condo owners, providing protection in the event that owners must pay a share of a significant assessment. For example, should an individual be seriously injured on common property and the courts award a judgment that is higher than the amount of liability coverage provided by the condo’s or association’s policy, then the loss assessment coverage will cover the unit owner’s share.

“The Illinois Condominium Property Act is very specific in at least the minimum types of insurance associations must carry,” says Mindy Maggio, commercial lines sales producer for Chicago-based Rosenthal Brothers Insurance. “So, they have to insure the building for 100% replacement cost. They have to do it; that’s basic. They have to have fidelity. They have to have directors and officers, unless the’re a very, very small association,” she says.

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