Building Management Hawaii - April/May 2012 - (Page 25)
Do Condo Owners ‘Get’ Your Master Policy?
By Ron Tsukamaki
hen it comes to condominium insurance, there is a lot of room for misunderstandings about personal condo owner insurance and the association’s Master Insurance Policy. Are you doing your part to educate your condo owners? Do you provide reasons why owners need personal insurance for their unit? If a unit is damaged by fire or other loss, do owners understand the consequences of inadequate homeowners insurance? For example, do they know what happens if a water pipe bursts in their unit and damages their neighbor’s property? If their negligence was a cause, their personal liability coverage will reimburse the neighbor of his losses. Without this, they may be sued. • AOAO Master Insurance Policy covers property and liability claims involving the common area elements of the condo association. This includes the “as built” building’s exterior shell, internal walls, floors, ceilings, kitchens, bathrooms and built-in cabinets.
Only about 60 percent of Island condo owners have personal insurance.
• Personal condo owner insurance insures personal property and any parts of a unit that aren’t covered by the condo association’s insurance policy, including upgrades, furnishings, personal property and personal liability. Surprisingly, it is estimated that only about 60 percent of condo owners throughout the Islands have personal insurance. This number is growing since Condominium Property Act HRS Chapter 514B was passed, which allows condo associations to require unit owners to provide insurance. The standard policy for condo unit owners (HO-6 policy) assumes that the property will be used for personal use by the owner and immediate family. If renting, whether through rental pool or independently, a “rental endorsement” needs to be added to the standard policy. The same holds true if non-rental guests use the property in the owner’s absence. For those condominium units that participate in rental pools, supplemental rental liability insurance offered by many rental pool companies is not a substitute for homeowner insurance. It only covers rental pool guests. Because of ownership changes and insurance needing to be renewed annually, it’s important to remind owners of the importance of maintaining homeowner insurance.
Below is information you can share with your building’s unit owners. If your unit is damaged by fire or other loss, what are consequences of inadequate or no HO-6 insurance? • The AOAO is obligated to repair only the basics of your unit to the original “as built” specifications. Items such as upgrades to the flooring, cabinets, countertops, personal property, etc. are not insured by the AOAO’s policy. • If you are responsible for the loss or it originates from your unit, and the AOAO is obliged to repair the damage, the AOAO can assess you all costs incurred up to its insurance deductible. The most common deductible is $5,000. • The AOAO’s policy does not cover an owner’s loss of rental revenue or the cost of temporary relocation expenses during repairs. Protection is optional under a HO-6 policy. • If you own a condo as a second residence, don’t assume that a liability umbrella on the primary residence extends to the HO-6 policy on the condo unit.
April - May 2012
Turn to page 26.
Table of Contents for the Digital Edition of Building Management Hawaii - April/May 2012
Contents Building Management Hawaii, April/May 2012
DEPARTMENTS: Concrete Restoration
If You’re Not Testing, You’re Guessing. Diagnose your concrete woes to save time and money.
Corroding Rebar and Spalling Concrete. Why zinc can be a spalling solution.
Top Five Fixes for Spalling. Preventing the corrosion of your building.
Trees – Our Green Assets. How not to plant the wrong tree in the wrong place.
Watts Up? Watts Down!. What you don’t know about parking lots could cost you big bucks.
Covered Parking & Photovoltaics: A Symbiotic Relationship. Covered Parking & Photovoltaics: A Symbiotic Relationship
Fire Prevention & Response
Top 10 Fire Fighters. Preventing fires is a job for everyone, but condo boards and property managers have a particular responsibility.
Keep a Clean Chute. Maintainance of trash chutes prevents serious high-rise fires
Stop, Drop & Go Wireless. New technology aids in fast response and saving lives.
Insurance: Do Condo Owners ‘Get’ Your Master Policy?
EDITORIAL: Editor’s Note
Ask An Expert: Epoxy vs. Regular Rebar
Movers & Shakers
Resource Guide: Concrete Restoration & Asphalt
Building Management Hawaii - April/May 2012