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PRVA Insurance Coverage
Insurance is a confusing thing to most of us. This
article will try to clarify exactly how our Master Insurance Policy
works for the benefit of its members.
First, what Association members ‘own’ and what
they need to insure are two different things. We all own ‘studs-in’
subject to the restrictions of our Condo Documents. However, in regards
to insurance coverage, it makes much more sense for the Association to
provide ‘studs-in or all-in’ insurance. This is due to the savings
it ultimately provides for the individual unit owners.
One unit owner questioned their own personal
insurance agent. Lee Gaudette of Gaudette insurance was kind enough to
supply this explanation. “As far as your condo – the Association
By-Laws determine what is covered by the master insurance policy.
Typically, as a unit owner, you technically own from the “studs-in”,
but the Association agrees to cover your portion (studs-in) along with
the common portion or ‘studs-out’”.
He goes on to say, “I have seen a few
Associations, particularly older developments, which do not extend the
master policy to a studs-in or all-in basis. This approach has fallen
out of favor because of the Associations’ superior buying power and
complications in adjusting losses when the damage is spread among
multiple unit-owners and the Association.
Therefore, the unit-owners need a policy that
covers their personal property and a couple of risks unique to condos,
such as loss assessment.” Mr. Gaudette also advises that unit owners
should obtain dwelling coverage to cover the master insurance policy
deductible of $5,000.
So, how, exactly does this work? We have had the
current policy in place for some time. In 1999, there was a fire in one
of the units and the master policy kicked into effect. At that time, we
had a $1,000 deductible. The unit owner’s insurance absorbed the first
$1,000 in damages and the master insurance policy paid for the new
flooring required for the unit.
So, what should we do as unit owners? You recently received a letter
from the Board advising you that it had raised the deductible of the
master policy from $1,000 to $5,000. It also urged you to be sure your
individual insurance policy “provides $5,000 in dwelling coverage”.
On my personal policy this was the first line item simply called
‘Dwelling’ with the ‘Limit of Liability’ amount of $5000. We
have heard of several instances where people checked their policy and
learned they were covered for, and therefore paying for, far more than
they had to. So, this could be a savings for you. Be sure to check your
status!
So, in conclusion, the superior buying power of our
association is saving the unit owners money on their individual
policies. If you needed to insure your units for an amount that would
cover a ‘studs-in’ policy, it would cost much more than the current
requirement.
More information on insurance can be found on www.paulreverevillage.com/insurance_provisions.htm
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