Much has been written about condo and apartment association insurance versus insurance carried by condo / apartment unit owners. The two main types of coverage offered to condo associations are:
1) Bare Walls In – policies covering all real property from the exterior framing inward, excluding fixtures or other installations within the unit.
2) All In – policies covering all fixtures, installations, or additions within the interior surfaces of the individual units.
Obviously the best one for your unit owners would be the All In condo association insurance policy, which would limit the need for owners to purchase additional coverage. Condo associations buying Bare Walls In coverage leave a bit more loss exposure for their unit owners. Most condo associations will advise unit owners on which policy is covering the premises. But what about deductibles?
Most condo association insurance policies have a deductible. As condo associations reassess their insurance limits and premiums and increase their deductible amounts, many unit owners are left exposed to large loss amounts. Why? Because condo associations can, and do, pass the deductible on to the unit owners.
In the past, deductibles topped out at $5,000. With historic losses in the insurance industry, many policies became hard to obtain, had lower limits, had higher deductibles, or simply cost too much to continue at the current level of coverage. These days it’s not uncommon to see a condo association with a deductible of $25,000 or even $50,000. If the damage to the building is spread among 25 residents, the deductible is much easier to afford than if the damage is limited to one or two units.
If your condo association has opted for higher deductibles, inform your unit owners in writing of their exposure. Unit owners can purchase their own property policies to cover any losses not handled by the condo association policy, thus reducing the amount they’re responsible for should disaster strike. Paying $25,000 – $50,000 to cover the association’s deductible isn’t in everyone’s budget. Unit owners who currently have property policies should confirm with their personal agent that their policy would cover the deductible in the event of damage.