Do I Need Condo Insurance?

So you purchased a Condo? Everything is taken care of for you, someone else mows the lawn and cleans the pool. The maintenance man comes around every so often to check on things. It seems like the perfect solution for busy people who want to own a home, but don?t have time to do all the things that homeownership entails.

If you think that someone else is taking care of the insurance for you, I would caution you to think again. The Association may have a ?Master policy? that insures the structure, but chances are, that policy has a very high deductible or may only be covering the outside walls. YOU NEED to know what that Master policy covers. It makes little difference if you own a Condo to live in or you have purchased it as investment property?. The CONDO INSURANCE policy you purchase needs to include what the Master policy does not.

The Association?s CC&R?s (Codes Covenants and Restrictions) are the ultimate laws that direct how insurance issues will be handled. Who is responsible for the damage to interior walls, fixtures, flooring, roofing, heating and cooling? If it is the Association?s Master policy, who is responsible to pay the deductible? How high is that deductible? These questions are better answered before lightning strikes or the toilet overflows for 8 hours!

Besides the physical damage to the structure, each owner should also take into consideration the replacement cost value of their contents inside the condo and most importantly, the liability issues associated with home ownership. The Master policy purchased by the homeowners association does nothing for your personal property nor does it provide you with insurance for your personal liability exposure.

Finding out at the time of a catastrophic claim is the worst time to find out that your HOA ( Home Owners Association) just reduced the monthly association fees because they stripped the master policy of protection that you were counting on. What this means, is that keeping aware of what the Board of Directors are doing is also critical in protecting your home. I have found that every few years, the newly elected Board of Directors review the association?s balance sheets and when they see the high cost of insurance, start working to bring that figure down. Make sure that you are on their mailing list for ? News about the HOA?.  Many times, this important information is sent to the Condo unit?s address and not the mailing address of the owner!

If there was one thing that I would wish that all my Condo clients would do, especially in Arizona, is to invest in a water shut off valve to the house, making an easy place to turn off all the water. One of the leading causes of Homeowners claims in Arizona is plumbing related water damage that occurs while the owner is away. Living in Arizona and dealing with dry heat, most Arizonans try to get away during the hottest part of the Summer. This is when rubber hoses on the washing machine tend to dry and crack and also when supply lines to the toilets tend to lose their ?grip?. It would be a dream come true if the water was shut off before this happened!