Condo Association Management Blog

lesson to be learned from your experience is to read the fine print before you buy.

If the condo association insurance covers "nailed down" property then the "nailed down" property is covered by the HOA. So I would assume the HOA would be responsible for out of pocket deductible...????

For C. Neuman 
 
 
 
Not at all.

We had a management company who refused to give us specifics on our insurance policy for the association. The insurance agent would come to the meetings and tell us all is well. We changed management companies who actually got insurance bids and found that we had no liability insurance for the elected board members. WE also found other discrepancies. GET EVERYTHING IN WRITING!

I had the same problem recently. There was a leak in a water pipe inside one of the walls in my unit. The leak was not visible and the plumber had to cut away a portion of the drywall to expose it. The leak was small but it had been going for a while, so everything was covered in black mold, and the drywall was soaked from the inside. 
 
I was told that the damage to the walls is covered by the association's insurance, but that because the damage is less than $5,000 which is the deductible, I am better off fixing everything myself. If the association were to submit an insurance claim, it would charge the deductible against my account because the water pipe that broke was supplying my unit exclusively. (It would have been different if the main pipe that goes through several units broke.) 
 
I also learned that association's insurance does not cover any personal property. So the damage to my bathroom cabinets is my responsibility in any case.

According to what our insurance company and the state laws have indicated, the only thing the condo insurance covers is "anything behind the paint on your walls to the outside of the building" and of course the common areas...but your personal homeowners insurance covers anything from the paint on the walls inward to include your personal belongings.

Commentators are using HOA and Condo incorrectly. There are very specific differences between the ownership and State law for each. The distinction is major in responding correctly to an inquiry.  
 
Most of the inquiries have been about condominiums - some of whom may also be members of a different entity - an HOA master association. For both entities, look to State law (except in States like Michigan and the District of Columbia that do not have HOA legislation). In most instances, the insurance is also regulated by the individual state's insurance requirements.  
 
State law normally preempts the condo documents, often written at a time when the State law was different. The deductible in many instances is classified as an expense to be shown in the Operating Budget of the condo. In fact, this is so prevalent that the mortgage underwriters look for this line item in considering FHA or Fannie Mae backed loans. The question of a covered insurance loss is again defined by the State and may or may not exclude items serving just one unit. For instance in Maryland - all original construction is covered by the revised insurance portion of the law; however, the unit owner may be responsible only for the first $1,000 of the total deductible - depending. State Farm in Maryland writes Master policies to include items otherwise excluded.  
 
Condominium owners should always have the insurance coverage that wraps around the Master Insurance Policy - usually referred to as HO-6. This would cover, with a minimal deductible, costs incurred by the owner, and should cover the assessment and sometimes the rental expense when a unit must be vacated for repairs. Again, many mortgage loans now require the borrower to carry this policy. There also is a policy (HO-4) for renters of investor owned units that should be required by every owner renting a condo unit.  
 
An owner's insurance agent can advise after consultation with the agent for the Master policy. Seek information and keep it updated whenever State law is amended.  

Condo and HOA liability insurance policies can vary considerably. The exact terms are determihned between the Board, the management company ( if any) and the insurance company. Another factor to be wary off is the fact that your original docuyments and bylaws have probably not dchanged over the yearws. At the same time your state legislators almost every year tweek the provisions in your state Condo and HOA acts. The state law preempts your bylaws in case of conflict. If for no other reason you'lln need expert help in buying your insurance.

There are some condo policies that offer coverage to pay for the master policy deductible. Make sure that you educate yourself on the various coverages available on condo policies by working with an independent agent with a good reputation and a solid understanding of what condo owners need. When purchasing condo insurance it is critical to understand what you must insure. In most cases the master policy doesn't cover what you think it may cover and the responsibility falls to the individual condo owner.

The "insured" is always responsible for paying the deductible. In fact, your year-end disclosures should include something about your master insurance, claims, the master insurance deductible, and often about an owner's obligations to carry their owner homeowners insurance for contents coverage. Owners always want something for nothing. "Free" insurance coverage paid for by the HOA really means "paid for by the members of the HOA." If your HOA paid the $5000 deductible for every claim made to the HOA's master insurance, your dues would be astronomical. Nothing is free. So, even though your HOA's master insurance covers many contents items in each unit, if the claim is less than the deductible, the insurance carrier wouldn't pay out. If the claim was over the deductible, the carrier would pay the difference between the deductible and any overage. Some homeowners insurance policies include deductible coverage too. If you had carried your own homeowners policy with deductible coverage - usually offered for a few hundred dollars per year, you might have received $5000 to cover the deductible from your homeowners carrier (less that deductible, which is usually $500 or less per occurance), and have been reimbursed the cost of any items not covered by the HOA's master insurance.  
 
BTW: Master insurance that covers anything nailed down or attached in units is really rare, and a true benefit to unit owners, because that insurance will kick in over the deductible and cover things that an individual homeowners policy might not cover.