Gary & Sandy Elliott
After the extensive rains a couple of weeks ago, and now that we have entered that time of year when tropical weather returns to Marco Island, it is a good time to review your various condo insurances. As a condo owner, Florida law states you are required to have at least $2,000 of loss assessment coverage. The only way to purchase this is with a Condominium HO6 policy (Home Owner 6). An HO6 policy covers regular hazards like fire, theft, liability and events like sudden water pipe breaks or water damage from a neighbor’s condo and wind damage. The HO6 policy is meant to work with the condo association’s master policy. The HO6 policy does not cover flood, which is a separate national program. Future condo reports will describe these other insurances.
What coverage should you have to be insured properly? The condo association’s master policy covers the building itself, including the sheetrock in your unit but not the paint on the sheetrock nor any of the interior contents.
The HO6 policy has a number of components, as described below:
Coverage A of the HO6 policy is for rebuilding anything in your unit attached to the walls, including all cabinetry and flooring. You should estimate about $50 per square foot as a good rule of thumb for an average condo. Obviously if you have upscale products in the buildout then a higher amount would be necessary.
There is no coverage B for a condo.
Coverage C is for personal property. This is all of your stuff in the unit and normal policies come with only $20,000 of coverage which is not a lot. You should also be insured for replacement cost on the contents. Make an inventory of your stuff with receipts or estimates of its value and take photos in case a claim is made. Total these amounts and get a policy which covers these items in case of a loss.
Coverage D is for loss of use. This insurance is needed if you cannot live in the unit or if you would lose rent because of a claim.
Loss assessments – If your building has a claim and it is not insured properly or has a large deductible you may be assessed and this assessment will be covered with an HO6 policy; $2,000 to $5,000 is a minimum recommended amount.
Liability insurance for at least $300,000 should be on the policy.
The vast majority of claims in Florida are for water damage from the unit upstairs or next door affecting your unit and others. Your HO6 policy covers your unit only. You are not responsible for any other unit unless you are negligent in causing the loss. If so, the other unit owner’s carrier will subrogate back to your carrier.
In Florida, there are many insurance carriers to choose from. Your insurance agent can help you select the best coverage for your particular situation.
Lee Gorodetsky and Jason Huff with Acentria Insurance (239-333-4833) contributed to this column.