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From the Editor
"Ask an Expert" Briefs
Condo Associations and the NFIP
What happens with there is not enough coverage from the NFIP to cover the condo association. Do the unit owners purchase their own coverage or does the association have to purchase excess coverage?
In this piece we answer three condominium questions for unit owners. First, when the unit owner is responsible for insuring unit improvements and betterments, is this limited to improvements made by them or any previous owner? Second, should the unit owner’s mortgagee be added as an additional insured or mortgagee on the association’s master policy? And lastly, how should agents respond when the mortgagee is requiring Coverage A limits equal to the loan amount?
Insuring “Other Structures” on HO-6 Condo Policies
An HO-6 condo form includes only Coverage A and C for direct damage to property…that is, no Coverage B. What if the insured owns a structure not attached to the unit? Can it be insured and, if so, how?
Insuring a ‘Box of Air’
Although the unit owner doesn’t own the entire structure, they may have responsibility for insuring some “real property” elements that are part of the building. And the only way to know what property the unit owner is required to insure is to read the condo association’s ruling documents such as the covenants, conditions and restrictions (CCRs).
Condo Claim Denial for Damage Caused by Leaking Appliance
Condo association bylaws say that any damage arising from a unit owner's fixtures or appliances make him or her liable for damage to the common areas. Our insured's appliance malfunctioned and flooded a common area and the unit below. The adjuster says there is no coverage because the insured was not negligent and the appliance just broke.
Condominium Loss Assessments...BEWARE!
With many of our 'Ask an Expert' questions, our VU faculty members are able to reach agreement on coverage, or at least a consensus. However, this article involves a claim where we fought like cats and dogs! The majority opinion agreed with the adjuster in denying the claim, though our minority responders present an interesting case FOR coverage. As always, if YOU have an opinion, send it to Bill.Wilson@iiaba.net.
Condos and Additional Insureds
Here's an issue that has come up several times in the past year: The mortgage company on your insured's condo says that they want to be named as a mortgagee or an additional insured on the condominium association MASTER policy. Needless to say, the master policy insurer refuses. How should you handle this situation?
Condos, Binders and "Walls In" Coverage
The VU 'Ask an Expert' service has been made aware of a number of requests from the lenders of condo unit owners who want to be named as mortgagees on the association master policy. In addition, they are demanding that the binder specifically state 'Walls In' coverage is provided.
Determining Coverage A on an HO-6 Condo Policy
Question: 'Can you provide a good rule of thumb for determining the Unit Owners Coverage limit on an HO6? Most clients have no idea how to determine the limit they need. I recall attending a CIC seminar several years ago where they provided a rule of thumb...I believe it was take 60 or 70% of the purchase price and use that as the limit.'
HO Coverage for Timeshares
What coverage does an insured have, if any, under his main residence's homeowners policy for a time-share unit? In this article, HO guru David Thompson suggests some changes to the HO package to account for some coverage gaps.
It’s very unlikely that many purchasers of a townhome or a stand-alone home in an association ever consider the insurance implications of such purchases. Only when it’s time for the agent to provide coverage, does the issue surface. This article examines some of the insurance aspects of owning homes in a homeowners’ association, including situations where residential property is often improperly insured to the extent that a serious E&O exposure is presented.
Hurricanes and Homeowners Association Loss Assessments
Many homeowners are just now being assessed by their homeowner or condo associations for losses that occurred in 2005 due to master policy exclusions, deductibles, or inadequate limits. Some insurers claim that the policy that responds is the one in force at the time of the hurricane damage. Under the ISO HO-3, that's wrong and here's why....
Insuring Townhomes...HO Policies vs. Master Policy
A small lakefront development of townhomes includes five buildings, each with two units in it. The agent feels that the best way to insure the buildings is via a master policy. The developer's attorney thinks individual HO policies are the best way to go. Who is right?
Interpreting Condo Association Documents for Insureds
Whether agents should be reviewing any kind of contracts for insureds is an issue without an absolute solution. It depends on many factors, from the type of contract to the agent's experience and expertise to, well, lots of other considerations. Too often, though, someone may take on the review of a legal document they're simply not qualified to interpret.
Loss Assessment Coverage
One of the most misunderstood coverages — and one that is of growing importance — is the loss assessment coverage in a homeowners policy. In this article, personal lines guru David Thompson presents the definitive analysis of what is and isn't covered in HO policies. You'll definitely want to share this with all personal lines producers and CSRs.
Managing the Townhouse and Condominium Unit Owner Risk
A condominium or townhouse owner is much more likely to have major insurance gaps in their P&C insurance coverage than any other personal insurance policy. In this article, Jack Hungelmann, author of the book Insurance for Dummies, examines several critical issues in managing this unique risk.
More HO Loss Assessment Misunderstandings
Can a condo association assessment for a deductible be paid by the HO policy without the entire association being assessed? An agent reports that one company will not pay unless the entire association has been assessed even if it is written into the by-laws that a single unit owner may be responsible for the association deductible.
Renting Condos (and Homes) to Others
Most likely, many of you have insureds who own a vacation home or condo that is rented out much of the time. Most of you have insureds who might buy or build a new home and rent their former home to someone until they can sell it. They often insure these properties under HO-6's and HO-3's. Wouldn't it be awful if they had no coverage....
Reviewing Condo Association Documents
Your agency is writing an HO-6 and has been asked to review the condo association's CC&Rs in order to determine the insurance responsibilities of your insured for her unit vs. what should be covered collectively under the association's master policy. Does this present any potential problems?
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