Unit Owner Coverages
If you are a townhome or condominium unit owner that has sustained property damage your insurance policy will include numerous kinds of coverage. These policies are often referred to in the insurance industry as HO-6 policies. The following is an overview of coverages typically found in a unit owner policy.
The declarations page found at the front of a unit owner policy will list many coverages. The most important coverages are:• Dwelling
• Personal Property
• Additional Living Expenses
• Loss of Rents
The dwelling coverage covers damage to the unit structure and things attached to the structure. A new shower head or door alterations a unit owner might undertake should be covered by dwelling coverage. Personal property coverage is for unattached items like sofas and lamps. Additional living expenses cover the extra expenses incurred by a unit owner when he or she is unable to use the property. The most common example would be extra meal expenses and hotel costs incurred while property is being repaired. Loss of rents is exactly that: lost income to the unit owner when a rental lease is terminated due to damage.
While these are the most common and sizeable coverage there are other coverages found within a policy. These other coverages are often referred to as “supplemental” coverage. Your policy may include the following additional coverages:
• appliance leakage
• sewer backup
• mortgage extra expense
• refrigerated products
• debris removal
• fire department charges
• loss assessment coverage
• Common and unit owner shared damage
These coverages may not be summarized in the declarations. To see if they exist in your policy you will need to review the supplemental, or additional, coverages section of your policy.
Many supplemental coverages are not intuitive. These coverages come with exclusions and exceptions to the exclusions. On example is Loss Assessment Coverage.
Loss Assessment Coverage
Loss assessment coverage is coverage of any assessment by your association arising from a loss otherwise insured by the policy. If the policy covers water damage, and the Association makes an assessment due to water damage, Loss Assessment Coverage should provide coverage. Yet many insurance companies create conditions, or exclusions, in their coverage. One common condition is the assessment has to be against all members of an association, not just an assessment targeting a single unit owner.
One dispute I have litigated is the timing of the assessment. Assessments are often made months or years after a storm or fire. Should an insurer cover an assessment arising from a fire or storm occurring years before? That depends on how the policy reads. Some policies are very specific and provide a clear answer. Other policies are not so clear. Check your policy, or hire a professional to see how your policy reads.
Common Element Coverage
The general rule is that townhome or condominium associations purchase a policy to cover common areas, while unit owners are responsible for purchasing policies that cover the unit. Yet some unit owner policies include coverage of damage affecting both spaces. I have recovered money in court for a unit owner that had such coverage under the following conditions:
1. The origins of the damage are covered by the policy (like fire, water, etc.);
2. There is damage to both the unit and common spaces, and
3. The common space that is damaged is the insurance responsibility of the association under its governing rules (Declarations or By-Laws).
Check your policy to see if this coverage exists, and how it reads. Damage to both the unit and nearby commons areas may be covered under your policy.
Contact us if you have questions about how your policy reads.