By Victoria Ostrosky

She had been searching for months. As soon as Stacy walked in, she fell in love with the condo’s floor plan and the glorious view of the Gulf of Mexico. Stacy’s closing was fast approaching, and she was anxious to spend some time there before she placed the condo with the management company for renting.

The day before Stacy’s closing her realtor asked her if she had her insurance in place. “What do you mean?” she asked him. “I thought the association covered all that.” She immediately talked with an insurance agent who told her, “I talk to many customers who are under the impression they only need to purchase contents coverage, thinking the association covers everything else. But their exposures and responsibilities extend much further.”

Stacy sat down with her agent, answered questions and made good decisions regarding her Condo Unit Owners Insurance Program.

Because the association is responsible for maintaining and insuring the exterior of the building (shell), condo owners need coverage for the replacement cost of Structural Elements Within – from the paint in, including flooring, fixtures, cabinets, built-in appliances, and more. This coverage amount is arrived at by calculating the cost per square foot to rebuild multiplied by the square footage of the unit. Sometimes the developer will provide this number and typically the range starts at $60 per square foot, and depending on the quality of construction, that can go up significantly. Your condo policy should always include Special Coverage A. This is broader coverage, changing the policy from a named peril to an open peril policy.

The next thing to consider is Personal Property coverage which is replacement cost on furniture, accessories, clothing, appliances, electronics, and other valuables, basically anything that’s not attached. Replacement cost is always recommended and gives you new for old, with like-kind and quality.

Loss of Use/Loss of Rents is an important feature as well. Depending on the carrier, they may offer loss of use but not loss of rent. If your unit is damaged and you can’t use it for a period of time, you may be able to collect under loss of use if it’s your primary or secondary residence. If you’re losing out on rental income, check your policy to see if you have the Loss of Rents coverage. You should always make sure you have the correct policy for the right risk.

Loss Assessment is another important coverage on condo policies that Florida law requires. Its purpose is to pay up to your loss assessment coverage amount (typically $2,000) for an assessment levied by the association for covered losses to the common elements. For example: this past October 10th, Hurricane Michael knocked down most of the fencing and damaged the roofs of the administration building and conference center in my complex. Because these perils were covered under the association’s policy, they had the option to assess each condo owner to help recoup their out-of-pocket expense.

Then there’s Flood coverage, which is typically a separate policy. The unit owner should carrie flood insurance even if their unit is not on the ground floor. Some condo associations purchase a master program through the National Flood Insurance Program called the RCBAP (residential condominium building association policy). This policy does covers many of the interior build-out items for a unit owner but it does not cover the personal property. So does the unit owner still need their own condo flood policy? David Thompson, with the FAIA (Florida Association of Insurance Agents) says this: “If there is no RCBAP in place the unit owner needs his own primary flood coverage. If the RCBAP has a large deductible and the unit owner sustained building damage, then their [flood] policy will respond. Should the unit owner be assessed by the association for a flood loss, the unit owner’s policy will cover the loss assessment up to their building limit with no deductible. This alone is a compelling reason for all condo unit owners to have their own building flood coverage.”

We haven’t even mentioned Liability and Mold and Water Backup, which are also important coverages on condo policies. And if you rent your unit, always consider excess of higher limits of liability protection. The bottom line is this – when it comes to condo insurance policies the average consumer isn’t aware of their exposures and responsibilities. You should always talk to an experienced insurance agent so you can make the best coverage decisions for your situation.

Insurance Zone, owned by Joe and Lea Capers, is a full service commercial and personal lines insurance agency serving Destin, Miramar Beach, Santa Rosa Beach (30A) and Inlet Beach. Visit their Video Library on www.ins-zone.com and watch our informative video on ’Condo Insurance Made Easy’, or call 850.424.6979.  Victoria Ostrosky, author of this article is an Agent/CSR with IZ.

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