Below is tip we received from Jon Crain of Armstrong/Robitalle/Riegle Business and Insurance Solutions regarding unit owners and earthquake loss assessment coverage. Being in California where earthquakes are an inevitable occurrence, we suggest that you take a moment to read their tip of the week.
UNIT OWNERS AND EARTHQUAKE LOSS ASSESSMENT COVERAGE
(HO-6 Policies also known as Condominium Policies)
We receive many inquiries from unit owners asking what steps they can take to properly insure themselves individually against loss that may be limited or not included within the Master Condominium Insurance program.
We always recommend that each unit owner carry a “condominium unit owners” policy also known as an HO-6 policy. These policies are designed to provide coverage for both the unit owners’ personal property and personal liability. Unfortunately, statistics show that as many as 50% of unit owners do not maintain this coverage.
It is all too common for a special assessment to be charged against the individual unit owners as a result of a loss the Association incurred due to lack of coverage, insufficient coverage or absorption of a large deductible. How can unit owners protect themselves from such an assessment? There is an extension of coverage available within the Condominium Unit Owners policy known as “loss assessment coverage”. This coverage may be purchased by endorsement or sometimes automatically included within the policy form. This coverage provides reimbursement for the type of special assessment referenced above.
In addition, many carriers will allow the loss assessment coverage to include earthquake. This would provide coverage for a special assessment arising out of damage caused by an uninsured /under-insured earthquake loss. Keep in mind that some carriers may not offer this coverage unless the Association maintains some minimal amount of earthquake coverage
Finally, loss assessment can be used along with other methods to provide coverage for a loss assessed to a unit owner that is covered under the Master Insurance policy, however the loss is under the deductible (usually $5,000 or $10,000).
Below is a summary of some of the coverage’s offered within an HO-6 (Condo) Policy
Because your personal property and liability are NOT covered under the Association Master Policy, we recommend that every condo owner purchase their own Condo Owners/ H06 insurance policy. This policy is designed to cover
This coverage is for items such as your clothing, furniture, jewelry, television, etc.
ADDITIONAL LIVING EXPENSE:
This coverage is for your unit if it becomes uninhabitable due to an insured loss)
Covers you for lawsuits, legal & medical expenses if you’re legally responsible for injury or property damage to others.
CONDO BUILDING COVERAGE:
to cover upgraded carpeting, wooden flooring, window coverings, built-in cabinets or bookcases, finished surfaces, wall or ceilings. This coverage is important to consider as you may be responsible for interior losses or damages. The deductible is usually much lower than the deductible on the Association Master Policy. This may be required by your lender
covers your share of assessments that may be charged by the HOA for property or liability losses
EARTHQUAKE LOSS ASSESSMENT:
covers your share of assessments charged against you by the Association for damages caused by an earthquake.
~ To summarize we highly recommend every unit owner secure an HO-6 (Condo) policy ~
We hope this information is helpful to better assist in managing your personal insurance needs.
If you would like an insurance professional to review your insurance policies, please contact personal lines expert- Natalie Myrick. She will review your current policies, make coverage suggestions, and provide a no obligation quote with an A rated personal lines carriers. Natalie can be reached directly at (714)221-3937 or via email at firstname.lastname@example.org