Do I need condo insurance?

So you bought a condo … Everything is taken care of by you, someone else mows the lawn and cleans the pool. The maintenance man comes in from time to time to check things out. It seems like the perfect solution for busy people who want to own a home, but don’t have the time to do all the things that homeownership entails.

If you think someone else is taking care of the insurance for you, I would advise you to think again. The Association may have a “master policy” that insures the structure, but that policy is likely to have a very high deductible or only cover the exterior walls. YOU NEED to know what that master policy covers. There is little difference whether you own a condo to live in or have purchased it as investment property … The CONDO INSURANCE policy you purchase should include what the master policy does not include.

The Association’s CC & Rs (Codes, Covenants and Restrictions) are the fundamental laws that govern how insurance matters will be handled. Who is responsible for damage to interior walls, fixtures, floors, ceilings, heating and cooling? If it is the main policy of the Association, who is responsible for paying the deductible? How high is that deductible? These questions are best answered before lightning strikes or the toilet overflows for 8 hours!

In addition to the physical damage to the structure, each owner must also consider the value of the replacement cost of its contents within the condominium and most importantly, the liability issues associated with home ownership. The master policy purchased by the homeowners association does nothing for your personal property or provide insurance for your exposure to personal liability.

Finding out at the time of a catastrophic claim is the worst time to find out that your HOA (Homeowners Association) just lowered your association’s monthly fees because they removed the Master Protection Policy you had in place. What this means is that being aware of what the Board of Directors is doing is also critical to protecting your home. I found that every few years, the newly elected Board of Directors reviews the association’s balance sheets and when they see the high cost of insurance, they start working to reduce that number. Be sure to be on your “HOA News” mailing list. Many times, this important information is sent to the address of the condominium unit and not to the mailing address of the owner.

If there is one thing I want all of my Condo clients to do, especially in Arizona, it is to invest in a water shutoff valve for the house, which makes it an easy place to turn off all the water. One of the leading causes of homeowner claims in Arizona is plumbing-related water damage that occurs while the homeowner is away. Living in Arizona and dealing with the dry heat, most Arizonans try to escape during the hottest part of the summer. This is when the rubber hoses of the washing machine tend to dry out and crack and also when the supply lines to the toilets tend to lose their “grip”. It would be a dream come true if the water was shut off before this happened!