It is important that unit owners understand what they are responsible to insure as opposed to the association policy. All homeowners also require additional insurance coverage to protect themselves from lawsuits and other types of losses.
Association declarations, by-laws and the Illinois Condominium Property Act define who is responsible to insure which property. Illinois law takes precedence in most situations especially if there is ambiguity or conflict with condominium documents. The following applies to almost all Illinois associations. A very small number require more or less of the inside to be insured by the unit owner. When in doubt refer to your declarations.
Remember, it costs very little to be safe rather than sorry!
What part of the inside do I need to insure?
You need to insure more of the inside of your unit than you might think.
Covers the common elements, limited common elements and a very
limited amount of the inside of your unit against an insured loss (fire, theft, windstorm, tornado, etc.).
UNIT OWNERS MUST INSURE:
• All decorating and window treatments
• Any and all flooring installed on top of the base floorboards no matter who installed them (carpeting, hardwood floors, tile, stone, etc.)
• Any and all additions and alterations, improvements or betterments installed by you or any previous owner
– Redone kitchens, bathrooms, cabinetry, trim, doors, light fixtures, etc.
– This can include “upgrades” beyond the basic unit originally offered by the builder or developer
In other words, the more extensively you or any previous owner has updated the unit, the higher “Dwelling” (building) limit you need to buy on your own Condominium Homeowners HO-6 Policy.
Do I have the right kind of policy?
All unit owners who live in their unit need a Condominium Homeowners Policy (HO-6). A renter’s policy (HO-4) does not protect you properly. Owners who rent out their unit to others must have a different kind of policy.
Do I have enough? How much do I need?
Every unit is different. Some have been extensively updated or renovated. Newer units may not have been renovated but all upgrades from the builder’s basic spec’s should be assumed to be your responsibility.
Look around your unit. If the inside is destroyed by fire, you have to replace everything that was not a part of the original unit. It does not matter who did the renovation or paid for the upgrades.
The amount you come up with should match “Coverage A—Dwelling” on your Condominium Homeowners (HO-6) or landlord policy if you rent. If not, you are underinsured and need to immediately increase this limit of insurance on your policy.
Owners also need adequate contents limits to protect their furnishings, clothing and belongings. Jewelry and valuables need special coverage. Consider higher personal liability limits given the increasing size and number of lawsuits. This protects you for incidents at your residence and elsewhere. Loss assessment coverage should be increased per below.
Experienced condominium agents can easily assist you in determining adequate limits.
Why do I need loss assessment increased on my policy?
Your association can “assess” you for damage caused to the association’s property or for their deductible—whether you caused the damage or not. Association deductibles can be as much as$5,000, $10,000 or more. A basic HO-6 policy only provides $1,000.
What if I rent my unit out to others?
Landlords must have a different kind of policy, usually called a Dwelling Fire (DP-3) type which includes: improvements & betterments, landlord liability and loss of rental income. A regular homeowner HO-6 policy only covers owner occupied units and most of these specifically exclude coverage if the unit is rented to others.
What if another unit owner causes damage to the inside of my unit
or if I cause damage to another unit?
Owners are responsible for their actions and negligence that causes damage to others. However, your association declarations and the Illinois Condominium Property Act make it very difficult or not possible to seek reimbursement from either the association; another unit owner who may have caused damage to the inside of a unit; or from insurers other than your own.
In other words, you cannot rely on someone else’s policy to pay for damage inside your unit. You must have enough on your own and have the right kind of coverage in order to protect your own property completely.
Now I need to increase my policy, how can I afford to do so?
Most of the items above can be added or increased for very little additional premium. Each additional $10,000 in dwelling amount can cost as little as $10 per year. Increasing personal liability limits to $500,000 can cost less than $25 annually and loss assessment increases are also inexpensive. Best of all, many of today’s better condominium policies automatically include all of the above. Numerous discounts exist that further reduce the effect of any changes. Combine your auto and home for the lowest premiums.
This very brief guide cannot
fully advise you of your
insurance requirements and everyone’s needs are different.
Many other options or considerations need to be
discussed with a condominium
insurance expert who can ask the right questions and advise
you properly. Our staff would be very happy to help. Just
dial 1-800-827-5525 and a licensed professional will be
happy to answer any questions you may have.
Hruska Insurancenter, Inc. has become a leading insurer of associations by addressing the needs of associations, board members, unit owners and professional property management firms. Not all associations, individuals or policies are the same and only a thorough examination of your own individual situation can address your own protection, coverage or needs.