The condo is the most misunderstood policy in personal lines insurance, and you may ask why. Let’s examine the evolution and nuances of condo insurance.
The original definition of a condo was just the air inside the unit. Now, it can mean anything and everything. Many condo developments are converted apartments, which means they are probably on the older side and in need of updating. Others are built as condo homes—and updating is not necessary.
Originally—in terms of insurance responsibilities—the condo association needed to cover the walls, utilities, counter tops, and cabinets, so claims started to pile up as the units aged. Over time, water leaks, roof leaks, and wind damage cost the condo associations thousands of dollars.
Beyond a simple quote
So, the logical move was to give more responsibility for some of those claims to the unit owner. Due to this, when the unit owners ask their independent insurance agents to give them a condo policy, they may wonder why their agents ask for a copy of the condos’ bylaws and master deeds. A good agent will ask for these documents because we need to see where the association’s responsibilities end and where the unit owner’s responsibilities begin.
For example, who is responsible for the walls (i.e., sheetrock and any covering over that)? The same question needs to be asked about the counter tops, plumbing (a big one), and roof.
Who is living there?
Then, what happens if the unit is owner or tenant occupied? Of course, there is a difference in the form of the policy that needs to be purchased for coverage as a homeowner or a landlord, and that also could present a problem when someone decides to rent the unit out and not contact his or her agent.
Further, a townhouse could be either a condo ownership or a full ownership, such as buying a single-family home. So, the purchaser needs to discuss this acquisition with their independent agent—who then needs to ask the questions that need to be answered to place the correct policy in force for the client.
See? It’s not that simple. However, clients don’t need to go through the ins and outs of any insurance policy alone. That’s the value of working with an independent insurance agent.
Roger C. Butler, CIC
Roger Butler, CIC, is vice president of PIA of New Jersey. He also is vice president of personal lines at The Barclay Group in Riverton, N.J. Butler is an active member of PIANJ, and he has served on its board of directors and on several committees. Currently, he serves on the PIANJ Business Issues Committee. He is a Certified Insurance Counselor, and he is a member of the National Alliance. He is a past chair of the Skylands Producer Agency Council. In addition, he is a past member of the Mercury Agents council. Active in his community, Butler is vice chair of the Cinnaminson Board of Fire Commissioners, and past secretary of First responders JIF and past fund commissioner to the Municipal Excess Liability Fund.
