Risk & Business Magazine JGS Insurance Magazine Fall 2017 | Page 5

PEACE OF MIND IS PRICELESS
BY: BERNIE COSENTINO,
VICE PRESIDENT, JGS INSURANCE
Peace Of Mind Is Priceless
Insuring Your Condominium Or Co-op Apartment
W
hen it comes to insuring
your condominium unit
or co-op apartment,
just having a “piece of
the rock” may not be
enough. It’s the peace of mind of knowing
you are insured correctly in conjunction with
your association’s insurance coverage that
will allow you to sleep soundly at night.
Every homeowners’ association,
condominium or cooperative has governing
documents including insurance bylaws
dictating how the buildings should be
insured. Unfortunately, there is quite often
ambiguity as it relates to how the building
should be insured from the perspective of
the association’s insurance policy and what
the unit owner or shareholder is expected to
insure within their home.
In an effort to clarify this confusing subject,
here are some useful guidelines you can use
as a starting point to communicate how
your buildings are to be insured and what
residents should include in their individual
HO6 policies.
Let’s start by reviewing the three ways
documents may mandate how the
community is to be insured. They are (1)
Bare Walls, (2) Single Entity, and (3) All-In
coverage.
Should the bylaws read that the association is
insuring the buildings on a Bare Walls basis
in the event of a loss, the building’s insurance
policy would cover the damage from the
studs out to the exterior of the building.
Therefore, the resident’s HO6 would need to
cover everything from the studs into the unit,
which includes sheet rock, paint, flooring,
fixtures and the like.
If the bylaws call for Single Entity coverage,
also known as “original specifications,” this
would mean that a covered claim would be
the responsibility of the building association
from the exterior into the units including
walls, flooring, fixtures, and the like as
delivered at the time of conveyance by the
builder. The resident’s HO6 would need to
cover any upgrades, additions, alterations or
betterments that the unit owner had put in
after delivery by the builder. agent must inform the carrier of his or her
determination of the governing documents
so all parties involved are on the same page
at the time of a property loss. Not only so
the community insuring the property is in
compliance with its documents, but so it can
also inform the residents as to what they are
required to insure in their HO6 policies. If
the bylaws are very unclear, it may be a good
idea to amend the documents in order to
provide more clarity to all parties.
Lastly, All-In coverage has the community’s
policy provide coverage for everything
mentioned in Single Entity coverage as
well as upgrades, additions, alterations or
betterments. This is not seen as often in
condominium documents as it is in co-op
documents. In this case, unit owners or
shareholders would not have to carry very
much property coverage on their HO6 as
it would be provided under the building’s
insurance policy. Once all parties are on the same page with
how the buildings should be insured, it is
important to communicate this information
to the residents.
In the event of a loss to a unit, replacing the
resident’s personal belongings are never the
responsibility of the association or co-op. It
is essential that unit owners inventory their
personal belongings and make sure they have
adequate coverage in their individual policies.
I have always been an advocate of taking a
video of the entire unit, cataloging all of the
personal items that may be lost in a fire or
other covered-peril loss.
Let me reiterate that these are all just starting
points. Very rarely do the documents spell out
how a community is required to be insured.
It is very important that the documents are
reviewed by the community’s legal counsel
as well as insurance agent when making
a determination regarding the insurance
requirements. Prior to placing coverage, the
JGS Insurance Agency, a leader in residential
building insurance, has insured associations
and condominiums since the 1970s. We
always supply our insureds with a document
we call a fact sheet and include it with every
policy we deliver to the communities we
insure. This fact sheet lays out exactly what
the association is responsible for insuring
and what the residents should be insuring on
their HO6 policies.
Hopefully, this information will go a long
way in identifying how your association is
insuring your property and what is expected
of the residents, all in order to provide
everyone with the Peace of Mind they deserve. +
Bernie Cosentino is celebrating his 33rd year
in the insurance industry. Born, bred and
educated in NJ he is a proud father to his
adult children Joseph and Maria. Bernie is
currently in his 17th year at JGS Insurance
as A Vice President and broker/producer
diligently pursuing the most competitive
and comprehensive insurance program to a
wide range of customer base.
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