Insurance is designed to be there for us when we need it most. Without knowing the full extent of our coverage, though, we may find ourselves with less protection than we thought. For condominium owners, it is imperative to understand exactly what liabilities and risks are covered by individual resident homeowner policies and what is covered by the building’s policy. Unfortunately, many co-op and condo residents misinterpret who is responsible for what.
“For owners that have owned in other communities, there is generally a misconception that the “new” location has the same insurance requirements as their previous location,” says Charles Stults, president of Allen & Stults Co. Inc., an insurance agency in Hightstown. “There is also typically an incorrect assumption that the unit owner’s insurance requirements are the same as their maintenance requirements. Many times this is even misunderstood by directors and management. The greatest number of incidents damaging property is from water damage. Many others believe that if the damage is from another unit or from a backup that neither they nor their insurance is responsible for cleanup and repair,” he says.
Sal Sciallo, an agent with State Farm Insurance in Manalapan, adds that too many residents rely on the master policy to cover their property and belongings. This practice however, can lead to big bills in the event of an incident such as fire or damage, when the resident is not covered adequately or at all.
“A lot of times, there may be a high deductible. So if there is a five or ten thousand dollar deductible and their loss falls under that, there is no claim. There is a misconception that residents think they always have coverage through the master policy,” he says.
“Some association policies, not all,” he continues, “do not cover improvements and betterments. So if residents upgrade their kitchen counters or floors, it would not be covered.”