Fine Print: Condominium Insurance

Within the past decade condominium ownership has become an extremely popular lifestyle alternative for many Americans. Ownership of a condominium presents some unique insurance situations that are not of concern to single family homeowners and renters. Two of the more important coverage aspects commonly misunderstood or neglected by condominium unit owners are additions and alterations and loss assessment protection.

Additions and Alterations
If you are dissatisfied during the settlement process following a loss involving your condominium, there is good chance the problem will stem from the additions and alterations section of your insurance contract. Additions and alterations represent any physical improvement the owner puts into his or her unit that becomes a permanent part of the unit. These enhancements, which could include cabinets, built in appliances, fireplaces, wall coverings, molding, windows, and other customized features, can and should be properly valued and insured under the additions and alterations portion of the policy. Improvements made by a previous owner must also be taken into consideration, as they become the new owner's responsibility.

Many condominium owners are under the false assumption that permanent improvements are automatically covered under the "Personal Property" section of their condominium policy or are covered under the Association's Master Policy. In fact, improvements fall under the unit owner's policy in the section entitled "Additions and Alterations". There should be a limit in the policy that indicates a specific dollar amount of coverage. Typically, a standard condominium policy provides an automatic $1,000 coverage limit for additions and alterations. Unless the unit owner requests a higher coverage amount, there may exist a substantial gap between what the policy provides and what the owner needs.

Loss Assessment
As a member of a condominium association, by virtue of unit ownership, each unit owner may be assessed a share of an uninsured or underinsured loss suffered by the association. The principle of loss assessment might also apply in terms of the association's deductible being apportioned to each member in the event of a covered loss.

Additions and alterations and loss assessment are only two important aspects of condominium unit owner's protection. Personal property, legal liability and scheduled articles, among others, are equally important coverage concerns that unit owners should review with a qualified insurance counselor.