Wednesday, October 19, 2011

Condo Insurance... Simplified

What happens in the event of a loss?

Condominium insurance claims can often become complicated situations and difficult to understand. What is covered, and who is responsible for what?

The Master Policy

All condominium associations maintain a master insurance policy. These policies include liability, replacement cost, and (usually) directors and officers coverage. The most common claim on a master policy is for real property damage. Insurable damage is caused by a sudden or catastrophic event, which is the first place people get confused. Damage from an event taking place over a long period of time, like a slow leak, is NOT covered. If your roof caves in because of snow fall, insurance becomes involved because they consider that a "sudden" and "catastrophic" event. Most master insurance policies have a deductible of $5,000; This simply means that the master policy kicks in once the insurable damage amount goes over $5,000.

HO-6 Policies and How They Affect YOU

But who pays for all the damages up to that amount? That is where your homeowners HO-6 policy comes in. This is something that EVERY condominium owner should have! These policies have a number of provisions that not only cover damage under the associations deductible, but liability within the unit, relocation, personal property, etc. If a fire in your unit causes $25,000 worth of damage and you do not have the proper HO6 policy, you could be paying that $5,000 up to the deductible out of pocket! Landlords who rent their units should also maintain adequate insurance coverage, and remind their renters about “renters insurance policies”.

Sound Off!

The insurance process can be very confusing, so if you have more questions, leave a comment below, shoot us a tweet @MAcondoMGMT on Twitter or post on our wall on Facebook and one of our experienced property managers would be happy to explain it further.

FHA Requirements and Reserves

Hey Homeowners!

Thinking about selling or refinancing this year with a low down payment...? Might not be as easy as it was last year. The Federal Housing Administration (FHA) has put new criteria on any loans that come through their office. Here are some of the new requirements that your condo needs to have if you want to sell or refinance with FHA approval!
  • 10% of entire budget allocated towards reserves every year
  • Condo has funds available that equals the deductible under the insurance master policy
  • At least 51% owner occupancy
  • No pending litigation
  • No more than 15 % of common area fees are delinquent by one month


The list above is just a small portion of the new laws enacted for new FHA lending. Many condo owners and lenders are unsure of how this will affect sales and refinancing in the coming years. Given the subprime meltdown in the last few years, the FHA is taking every possible precaution to protect themselves from foreclosures. For now, we will just have to wait and see. Have you ran into this new process yet in a refinance or a sale? Tell us about it below.