When Mulitple Policies Overlap By Jeff Mayhew, American Family Insurance — Jeffrey Mayhew Agency, Inc.
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nsurance. It can be a daunting topic. We often hear from clients, “It’s too complicated!” or, “It’s so confusing!” It’s true that many people do not understand all the nuances of insurance; and, until they are forced to learn when they incur a loss, it’s one of the easiest things to just forget about. We find this is often the case with unit owners. After all, there’s a Master Policy carried by the Association, isn’t there? That policy should cover me and my unit, right? Does a unit owner really need to worry? Consider this scenario: Imagine that you come home from work one evening only to discover that water is leaking through your ceiling from the condo unit above you. It’s at this point you begin to wonder, “Is this really covered by the Association’s policy?” And the answer to that question is – MAYBE! The following is an explanation that just might help you know the answer!
What is a Master Policy? This Policy...
• Is purchased by the Association and is typically paid for through Association dues. • Provides building exterior and in some cases interior coverage for each unit. • Provides Liability coverage for common areas on Association property. • Has a deductible.
Are all Master Policies the Same?
No! Every Master Policy is written according to the guidelines specified in the Insurance section of the Association’s Declarations on file with the Department of Commerce. The Insurance Company does not determine the coverage included in your association’s Master Policy – this is dictated by the Board. To learn the specifications provided by your association’s policy, ask your board of directors, property manager or the insurance provider. This is the only way to know exactly what amount of personal insurance you need to purchase. The best situation is when the Board of Directors has made a definite coverage determination in the rules and regulations. Then, there is no question of what they are interpreting the Association documents to read. Here is a brief description of the most common requests we get for coverage from Boards. Bare Walls: This coverage includes the “common elements.” It does not include: wall finishing materials, floor coverings, cabinetry, finished millwork, electrical or plumbing fixtures serving a single unit, built-in appliances, any improvements or betterments. This is typical but not specific to brand new Associations just being built. (continued on page 31)
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January | February 2017
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