Condo Insurance Explained

Condo Owners: Raise Your Hand If You’re Insured (and Know What It Means)

When Premier Property Solutions takes over the management of a new property, we often find that many condos and apartments in Boston are dramatically under-insured because they think their mater condo association policy will cover a claim inside a specific unit. In this blog post we will walk you through the common types of policies for Condo Associations, and let you know what you can do to protect your property.

We must take the approach that your home may be under-insured to learn about the loopholes, leaps and dives of insurance claims that could be costly in the dollar range of millions per damages to your home. This also includes understanding how renovations could cause higher premiums have to understand the insurance-to-value appraisal process, and that renovations call for the reappraisal process from the insurance company. Our company was recently quoted in The Boston Courant regarding the level of coverage, and understanding the boundary of coverage for homeowners that live within a condo association’s master policy. It is essential to not assume that they have a "studs out" policy readily provided to them upon purchase of the home.

Types of Insurance Policies for Condo Associations

We have all heard of "studs in" or "studs out" coverage.  This refers to the boundary of coverage in some insurance policies.  If the master policy is "studs out," it means it covers everything from the studs out to the exterior for each unit.

Studs-In / All-In

If it is a "studs in" policy or "all-in"* policy, the unit’s ceiling, walls, floors, installed fixtures, appliances and cabinets would all be covered under the building policy, in addition to the building’s common areas hallways, roofs, energy equipment  etc.

"All-in"vs."All-in-per-Condo Docs"

Special conditions apply to insurance policies when making improvements and betterments (a/k/a upgrades to the unit). The differences are as follows:

All-in	This means the master policy will insure any improvements to the building made by unit-owners. Even though the unit-owner might have spent large sums of money to modernize the kitchen and bath, the improvements would be covered on the master policy. The unit owner doesn't need to insure the improvements on a homeowner’s policy. The insurance companies that offer "all-in" coverage usually do so with an endorsement. See the sample policy forms on our website.
All-in per Condo Docs	The insurance policy refers to the insurance section of the condominium documents to interpret what is covered on the master policy. If you see "all-in per condo documents" it means we have interpreted the master policy condominium document and feel it will adequately cover all improvements made by unit-owners.
Per Condo Docs	The insurance policy refers to the insurance section of the condominium documents to interpret what is covered on the master policy. If you see "per condo documents" it means we have interpreted the master policy condominium document and feel there is either no coverage for improvements made by unit-owners or the condominium documents are too ambiguous.
Original Spec's	Coverage only includes property in "units" and private storage areas which were initially installed in accordance with your condominium's original plans and specifications. If you have original specification coverage it means improvements or betterments are not covered on your master policy.

Who Determines The Type of Policy?

The Associations By-Laws generally dictate whether or not the condo association’s coverage should be studs in or studs out.  The By-Laws determine IN or OUT coverage, but the agent determines which level of all-in/all-in-per-docs/per doc/original they are using.

What’s Covered By the Policy?

As a general rule, H-06 policies a/k/a Home Owners Insurance Policies should include coverage for:

• Personal Belongings - clothing, furniture, computers etc., everything you would take with you when you move
• Loss of Use -  protection if the resident is unable to live in the unit as a result of an insurable loss ex. fire, flood
• In Home Liability - should someone get hurt while in the unit
• Master Policy Deductible

Make Sure You’re Covered!

As residents of New England, we all know that as winter approaches, Mother Nature can be as unpredictable as a last week’s eight-alarm blaze that left an estimated $2 million in damages to a commercial property down the street from our Boston property management offices on Summer Street.

When we see catastrophes like this, we all too often say "that could never happen to me", but the possibilities are endless! Ranging from fires, floods, tornadoes, or the increasingly frequent ice storms that have pounded New England in recent years, insurance premiums and claims for property damage have been increasing for 5 years.

For more information about Master deeds, please see the following article from Endlar insurance: