Consider condominium association bylaws before choosing insurance

PRIME August 2012 By Henry Stimpson Special to PRIME If you're a condominium owner, you need to insure possessions like furniture, clothing, and electronics. But, do you also need to insure the unit itself — the floors, ceilings, walls and built-in appliances? It all depends on your condo association's bylaws. "Condominium documents, which can be a fat, intimidating-looking stack of legalese, specify who's responsible for insuring what," Donna O'Meally, an agent of Harrington Insurance Agency in West Springfield said. She continued, "There are two arrangements. One type is called 'all in.' That means the condo master insurance policy bought by the condo association, covers both the building's exterior and the units themselves. If your association has an all-in policy, you just need to insure everything that would come loose if you could pick up your unit and shake it." While an all-in master policy covers damage to your unit's walls, floors, ceilings and built-in appliances, there is one catch. The policy typically pays to restore the unit to the condition it was in when you bought it. "So, if you've added expensive cabinets, flooring and wall coverings, you should buy coverage for additions and alterations," O'Meally cautioned. The other type of master policy covers just the building itself. If that's the case, you need to insure your unit from the walls in. Getting the right amount is a bit more involved since agents don't have automated replacement-cost construction estimators for condos as they do for houses. "Loss-assessment insurance is an optional but recommended coverage," O' said. "It covers assessments on condo owners for losses not covered in full by the condo master policy." For example, if there's a fire in one building, all the condominium owners in the development could be assessed to cover deductibles and other costs not covered by insurance. Loss-assessment coverage is inexpensive. "It's smart to buy loss-assessment insurance, which provides a lot of protection at little extra cost," O'Meally said. She warned, "Professionally run condo associations always have a master insurance policy. But these days, many condos are in small buildings that have just two or three units, and no one has bothered to buy a master policy. If your condo is in such a building, make sure that there's a master policy and that the condo association has a bank account." O'Meally knows of a case where there was a major loss and the insurer made the claim check payable to the condo association. But the money couldn't be deposited because the association didn't have a bank account. Harrington Insurance Agency is an insurance agency with locations throughout Massachusetts. A member of the Arbella Insurance Group, Harrington Insurance represents many national and regional insurance companies. For more information visit www.harringtonsaves.com.