Condo Claims: A Tale of Two Policies

Famous apartment neighbors Fred and Ethel, Lucy and Ricky

The insurance claim process is a little different for condo-owners because there are two policies involved: your own condo-owner’s policy and the condo association’s master policy.

The condo-owner’s policy (also called a unit policy) covers four things:

  1. Your contents (all of your stuff)
  2. The building structure (also called the dwelling) up to the deductible on the master policy
  3. Liability should someone get hurt on your property
  4. Additional living expenses should you be unable to use any part of your home and incur expenses

For this article, we will focus on numbers 1 and 2.

The association’s master policy is responsible for the building’s structure — including inside your unit.

Your unit policy will pay for dwelling damage up to the deductible amount of the master policy. A common misconception is that the condo-owner is responsible for the part of the building that is inside the studs of his or her unit. That’s not really true. In most cases, every part of the dwelling is covered by the master policy once its deductible is reached. If your claim is smaller than the master policy deductible, the unit-owner policy will pay the whole thing.

Here’s a simple example: Your condo’s master policy deductible is $10,000.

You have a kitchen fire that causes $15,000 worth of damage to your unit’s structure, and $7,000 damage to your contents.

Your condo-owner policy will cover the structure damage up to $10,000, plus the $7,000 in contents — $17,000. The master policy will pay the remaining $5,000.

Here’s a more complicated example from real life: We are working with the two unit owners of a two-unit building. The upstairs unit sprung a leak and did about $40,000 damage to both units. The master policy’s deductible is $2,500.

Because there are two units affected, the master policy deductible is split in two. The insurance company determined that one unit had about 33% of the total damage, and the other unit had 67%. So the unit-owner with the 33% damage will get $2,500 x .33 = $825. The unit-owner with 66% of the damage is entitled to $1,675. Each of these amounts will be paid by each owner’s individual unit-owners’ policy and subject to their individual deductibles.

The balance of the damage, $40,000 – 2,500 = $37,500 will be paid by the master policy and divided up using the same formula as above.

Before you have a claim: It’s a good idea to keep copies of these documents handy:

    • your unit policy
    • the master policy
    • the condo documents (declaration of trust, master deed, bylaws, etc.)

If you have a claim: Let the trustee of the condo association know as soon as possible. He or she will need to be involved in the claim process since the master policy might be in play. If your claim is less than the deductible on the master policy, the unit-owner adjuster will ask to see the condo’s documents and policy to make sure.

We’re here to help! Having a public adjuster on a claim like this makes it a lot easier for you. We can guide you through the maze of the policies, adjusters, and deductibles — maximize your settlement while minimizing your stress. Call us with any questions you might have 508-588-4243.

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