THE HONEST BROKER: THE NECESSITY FOR CONDO INSURANCE

THE HONEST BROKER: THE NECESSITY FOR CONDO INSURANCE

To protect their financial interest in a property, a mortgage company will ask for, and require the dwelling to be insured.  With a multi-family home such as a condo, villa, or townhome, the association usually carries a policy that will protect and cover the exterior of the building. This policy is called a “master policy” and is part of the homeowner or condominium dues that the owner pays. Of course, what is “covered” and to what extent it is “covered” is dependent upon the type of dwelling and the bylaws of that community. 

In addition to that, the mortgage company can require interior insurance to protect their interest.  This is called an HO6 Policy, sometimes referred to as “renters, condo or contents insurance” and is specific to damages experienced to the interior of the home.

Having condo insurance on your contents is financially prudent to possess even if there is no requirement to have it either by your mortgage company, or if the home is “paid off”, for your own protection. It is vital to look at the bylaws of your association.  In most instances, the extent to which an association will cover damages ends at your drywall.  Everything behind the wall or “unseen” is their responsibility, anything “seen” is yours.  The next few examples will help with clarity.

Example 1:  

Your neighbors’ water heater breaks, and you experience water intrusion into your unit potentially damaging flooring, furniture, drywall, etc.

A common misconception is that the neighbor or association should be responsible to “make it right” by paying for any repairs needed because you did not have anything to do with the flooding. However, unless there is documented evidence that there was negligent behavior by your neighbor, they are not responsible or required to correct any damage experienced to your home. This could be quite costly dependent upon the extent of damage.

Example 2: 

A “common” drain becomes clogged and you experience a back-up into your unit.

This could be from an air conditioning condensate drain or a plumbing drain.  The association is responsible to unclog the common drain and fix the problem, but any water intrusion from the back up will be on you.  Anything from the drywall out is the unit owner’s responsibility, no matter the cause.

Bottom line is that it is highly likely that at some point, if you live in a multi-family dwelling, you will experience anything from a minor catastrophe, like water damage, to a major catastrophe, possibly a fire or theft.  Condo insurance is the best way to protect yourself against a financial hit for repairs or replacement of items.  

Stay well and stay healthy

Diane Lott, Broker

Owner: Paradise Found Realty

*The highest compliment you can give is when you feel you can refer a friend…
  Hope to see them soon!

Paradise Found Realty, Inc. of Palm City

website:  www.ParadiseFoundRealtyFl.com

Email:  diane@paradisefoundrealtyfl.com

Phone:  954-294-5060

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  • Posted 3 years ago

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