Two devastating condo fires have occurred recently in the Seattle area. On January 13th, 2015 a condo fire destroyed two units in North Seattle and last week in Kirkland, WA six condo units were damaged by fire, displacing twelve people. As a condo owner, what important lessons can you learn from these terrible losses? I wanted to share three lessons, if adhered to, will lessen the financial impact a fire would have on a condo owner.
Lesson #1 – Your Condo Association Master Insurance Policy Does Not Cover You 100%
Despite what you may have heard at the last condo association meeting, your condo association master insurance policy does NOT completely cover your condo. There are two kinds of condo association master insurance policies that cover your condo to differing degrees:
Bare walls-in: this policy covers property from the exterior framing inward. It does not however cover fixtures and installations inside the condo itself. Your countertops, flooring, and bathroom and kitchen fixtures are not covered by the master policy.
All-in: this policy type covers fixtures, installations or additions within the interior surfaces of the outside walls, floors and ceilings of each unit. Better coverage but still does not cover you 100%.
Here is your homework assignment—find out exactly what your condo association covers and either buy a condo insurance policy or review your current condominium insurance to ensure all the gaps are covered. Listed below are coverages in a condo policy that will greatly lessen the financial impact Seattle condo owners experienced recently in the devastating condo fires:
Building Property Protection: This coverage will replace any property in your condo unit which are not covered by your condo association master insurance policy. Included are building additions and alterations, installations or additions to your condo.
Personal Property Coverage: None of the cool stuff that you own would have ever been replaced with the association’s policy. This coverage will replace your stuff owned or used by insured anywhere in the world.
Loss of Use (Reimbursed Living Expenses): Pays for the hotel and additional living costs while your condo is being repaired. It usually even includes food.
Loss Assessment Coverage: If there is a claim made against your condo’s master policy then all unit owners will have to pay the deductible which could be quite high. Your share would be covered when the assessment is a result of a covered loss, personal injury, illegal discrimination, and libel, slander, defamation of character, or invasion of rights of privacy.
Personal Liability Coverage: Please see Lesson #2 if you believe you could never be sued for a substantial amount of money. This coverage protects you if someone sues you because of bodily injury or property damage this coverage pay for legal costs and damages assessed.
Medical Payments to Others (Guest Medical Coverage): If someone trips and falls in your condo or any other similar accident then this coverage helps pay the medical costs.
Lesson #2 – You Probably Do Not Have Enough Liability Coverage
Unfortunately many claims that originate in a condo unit will affect other units as well. If the cause of the claim is accidental then you will not be held liable for the damage to the other units, but many claims can be considered your fault. If you are ruled at fault then you your liability coverage would pay for the losses to the other property and the losses in excess of your liability coverage would be paid by you with your personal assets. The settlement could include garnering your wages. The following are real examples of condo claims where the owner was held responsible:
Romantic Evening Gets Too Hot – Candles ignite the curtains and destroys two other units.
Soaking Wet and Not Very Clean – A bath is drawn but is soon forgotten and the owner leaves for the day. Water soaks through the floor and destroys the unit below.
Don’t Hate Me ‘Cause I Got Power – Generator on the deck catches on fire and destroys six other units.
Too make sure you have enough liability coverage check your current policy. Consider changing the amount to a minimum of $500,000 to $1,000,000. If you need liability coverage in excess of $1,000,000 you should look into getting a personal umbrella policy. An umbrella policy is a cost effective method to increasing your liability coverage. The coverage amount usually starts at $1,000,000 and adds on top of the liability coverage on your condo and auto insurance policies.
Lesson #3 – The Amount of Stuff You Own Exceeds Your Property Coverage
Nobody realizes how much they own and how much it is worth until they are filling a claim after they have lost it all. Sometimes it can take months for someone to inventory all stuff they have accumulated their entire lives. Now, here is the important question, “Do you own more than is insured?” First, check your policy and see how much property coverage you have. Second, do a quick estimate of how much all your electronics, clothes, shoes, art, rugs, furniture, grill, and everything else you own is worth. If you need to, increase your property coverage.
Pro condo insurance tip: Take pictures or a video of the inside of your condo and make sure you capture all of your most expensive items and receipts if you have them (this will make a future claim a lot easier). Store the pictures, video, and receipts somewhere other than your condo 😉
How Do I Get a Seattle Condo Insurance Quote?
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