Condo Media - February 2023 - 28

THE HO6 POLICY
AS A UNIT OWNER in a condominium,
cooperative, or homeowner association,
you need to know what money the
association master insurance policy will
provide to you in the event of a loss
and the amount of the deductible on
the master policy. The repair costs that
the association master policy does not
provide, including the amount of the
deductible per claim or per unit, will
be your responsibility to pay unless
it is covered under your homeowner
insurance policy (HO6). If you do not
have an HO6 policy for your unit,
the cost of repairs will come from
your own pocket.
MASTER POLICY
COVERAGE
Dealing with the tragedy of damage to your
home from an outside source - damage that
you had no part in creating - is very upsetting.
Whether it is caused by a tub or fixture
overflow, a broken pipe, a clogged HVAC
condensate line, or a faulty water heater, it is
an unwelcome violation of your sacred space.
Your condominium documents almost
always require the board to fund restoration
after a loss and repair damage to the
property through policies that are available
in the insurance marketplace. The master
insurance policy is written " per the documents "
which define the common areas and
the boundaries of the unit. Some documents
make the owner responsible for everything
from the " studs in " or provide for " bare
walls " coverage, and sometimes the association
is responsible for everything except the
owner's personal property. Some insurance
carriers offer other options like endorsements
that provide all-inclusive coverage,
or " all in " policies, which can make the claim
settlement process easier. The documents
and by-laws dictate what is necessary for
insurance coverages for the association and
may also set requirements for the homeowners.
The master deed sets forth the unit
boundaries and defines common areas.
28 CONDOMEDIA February 2023
MASTER POLICY DEDUCTIBLE
However, under every master insurance policy there is a deductible
applied to each property damage claim. Some condominium
documents specify a maximum deductible for insurance policies,
but many do not have such a limit. In the past, deductibles of $1,000
were common, but over more recent years, higher deductibles of
$2,500, $5,000, $10,000, and even $25,000 have become available and
popular as a strategy for boards to reduce ever-rising premiums, especially
in properties prone to water damage claims and ice damming.
For example, if your board has chosen a deductible of $10,000,
your personal homeowner insurance policy (HO6) serves as a safety
net to cover the cost for repair of damage to your unit up to that
$10,000. Although it does not seem fair, the per claim or per unit
deductible is not covered by the association policy, even if the damage
resulted from a roof leak, a broken water pipe, a toilet overflow, or the
plumbing in the unit above you. You will need to file a claim with the
agent for your homeowner policy to cover the association deductible
or pay out of pocket from your own bank account. The deductible on
your homeowner policy will also be applied to the claim so keep that
in mind when you select it on your personal homeowner policy or
HO6 coverage. If you are not required to have a homeowner policy by
your condominium documents or if you choose not to have an HO6
policy, then the master policy deductible (in this example $10,000) of
any claim will come directly from your pocket.
Condo Media - February 2023

Table of Contents for the Digital Edition of Condo Media - February 2023
