Insurance Definitions By Tony Ciro, Tony J. Ciro Insurance
H
ere are some general definitions for commonly used terms relating to Townhome and Condominium Insurance.
Master Policy: This is a term used to refer to the insurance policy that covers an association as required by the association’s governing documents. Governing Documents: In general this refers to the association’s articles of incorporation, bylaws, and declarations. The insurance section under the declarations dictates how a Master Policy is to be set up and what coverages are to be provided. Three basic options are outlined below: Bare Walls: Coverage on a condo/townhome structure from the studs out. On this type any interior features/finishings would not be covered. Examples: floor coverings, wall coverings, counters, cabinets. Original Specifications: Coverage on a condo/townhome structure covering the interior to be built back to how it was originally constructed; no betterments or improvements made by any unit owner are included. Walls-In/All-In: Coverage on a condo/townhome structure covering the interior to be built back to the way it was immediately prior to a claim, this includes coverage for betterments and improvements. H06: This is a common term that refers to a unit owners policy. It stands for a Homeowners Form 6 which is used to insure a condominium or townhome unit. This is the policy where a unit owner covers their dwelling, personal property, personal liability, and loss assessment, among other things. Some coverages included are defined in more detail below: Dwelling Coverage: This is a limit added to the Unit Owner Policy to cover structural damage that is not insured by the Master Policy (Association Policy). Some common examples are: interior finishings and/or betterments and improvements. This coverage is also used to cover structural damage a unit may be responsible for, up to the Master Policy deductible. Personal Property: This is coverage for a unit owner’s belongings such as furniture, clothes, dishes, food, etc. This is needed on an H06 as these items are not insured by a Master Policy. Loss Assessment: An endorsement added to an H06 policy to provide payment for a covered claim expense that is assessed to individual unit owners. An example would be a unit owner’s portion of a deductible from a Master Policy.
Replacement Cost: The repair or replacement with new materials of comparable kind and quality. Actual Cash Value (ACV): This measure of value uses replacement cost as a base amount and then adjusts for depreciation due to age, condition, and obsolescence. Deductible: A specific amount of money that the insured must pay before a claim will be paid out. The Master Policy has a deductible as does an H06 policy.
January | February 2017
11