Condo owners might be wasting cash on extra coverage

Whether you just purchased your first condominium or have lived in one for some time, a personal condominium unit owner’s policy is a must.

Dollar for dollar, it may be one the best insurance products available. In addition to providing personal property protection it can be designed to include some very critical protection.

One area of concern is the addition of “Additions and Alterations” or Building coverage. Most policies include a minimum of $1,000- $5,000 coverage. Some areas of concern arise when we are setting up a new claim for an Association.  Your adjuster will ask for copies of any unit owner’s policy that are affected by the loss.

It seems that typically a unit owner will carry $5,000 to $10,000 coverage for the Additions or Alterations (Building) coverage, but in some cases we see astronomical amounts, some exceeding $100,000. It seems that there may be a disconnect with the unit owner and their insurer (or agent). It may be driven by the fact that they just spent an enormous amount of money for the unit (market value) and someone suggested that they purchase additional property coverage under their personal policy.

Here’s the problem. It is extremely expensive to add this coverage and it will only act as supplemental coverage in the event that the building Master policy property limit is inadequate.

A word to the wise. Check with the agent or company who provides the Master policy to determine as best you can that the Master policy’s coverage is representative of the cost to rebuild and  look into the deductible as many Associations have opted to increase the deductible to $5,000, $10,000 or even $25,000. A large deductible is an example where the unit owner will add this additional coverage to their policy in the event a loss is confined to their unit (water or small kitchen fire for example).

This is only one section of a policy that provides essential coverage, but it’s an area that can be confused and ultimately be very costly.