You need to be able to tell your insurance agent what the Homeowners Association insurance covers in order to get an accurate quote and to be properly insured. CC&R’s are sometimes vague when it comes to insurance coverage for the interior of the units. If you don't know, you can ask your agent to review the CC&Rs to determine it for you. You should also let your agent know how much you charge for rent to be sure that there is enough coverage for loss of rents if something did happen.
Sometimes the CC&R’s will cover the interior of the unit as it was originally built but any upgrades you have made to the unit will not be covered by the Homeowners Association’s insurance policy. If you have made any improvements to the unit you can add Building Property coverage to a personal Condominium policy. The cost for Building Property coverage is usually quoted as an amount per $1,00 of coverage (for example, $4.00 per $1,000 of coverage).
Sometimes the CC&R's will only cover to inside the walls or sometimes only the exterior or the roof.
If you have a condo or townhouse, you should ask for a Condo Rented to Others quote and possibly an Earthquake quote.
We will briefly go over the coverage options below.
Condo Rented to Other:
Personal Property – This will cover any personal property of yours that is in the unit. Personal property can be thought of as anything that would fall out of the home if you turned it upside down. This includes refrigerators, washer/dryer, window coverings or furniture.
Loss of Use – If there was a covered loss in your unit (fire, water or smoke damage for example) and your tenant could not live in the unit while it was repaired this coverage would pay you for your loss of rents. We typically recommend covering approximately 6 months of rents.
Personal Liability – This coverage will protect you in the event your tenant tries to sue you for negligence, wrongful eviction or if someone was injured in the unit. It is a broad coverage but these are just a few examples.
Guest Medical – This coverage is in case someone gets injured in the unit. Anything over the $1,000 limit will be covered under your personal liability coverage.
Loss Assessment – This coverage is good to carry in the event that the Homeowners Association comes to the unit owners to pay for their insurance deductible for a covered loss as spelled out per the CC&R’s. For example, the Homeowners Association might have a $10,000 deductible so having $10,000 of loss assessment coverage will make sure you have the necessary coverage for any situation.
Earthquake:
The Homeowners Association may have an Earthquake policy for the association and it will have a large deductible (for example 25%). Each unit would be insured for a maximum amount. In this case, if an earthquake happened and your building was severely damaged to the point it had to be completely rebuilt.,the association could come to you for their deductible. If you had an Earthquake policy with the loss assessment coverage, a large percentage (for example 85%) of that amount would be paid from your insurance. Some people are more worried about earthquakes than others but to make sure you review all your options ask for an Earthquake quote to review mainly for the loss assessment coverage provided under it.
We work with several great insurance agents and we'd be please pass on their contact information.
Please call or email us with any questions about this or any of your Property Management or Real Estate sales or investment needs.
