CAI-NJ June 2022 Community Trends

FAQS INSURANCE... from page 30.

other necessary coverages. Those coverages include, but are not limited to, such things as personal property, additional living expense coverage, loss assessment and personal articles floaters. The additional living expense coverage is one area that most unit owners do not realize is their own responsibility. The additional living expense coverage will pay for you to rent or lease another place to live in while repairs are being made to your unit after a loss. This cost is not provided by the association’s master insurance policy. The H06 will also provide personal liability coverage to protect you for accidental actions that you may be held personally liable for. For example, if that great golf swing goes awry one day and you acci dently cause injury to another golfer. The HO6 policy would provide you with protection in a suit for damages

for personal injury that you may have caused. So even though your associ ation may cover the building including the unit, you should always have your own coverage as well. Residents should discuss all their Personal Lines needs with their own insurance broker. Q: Who is responsible for the deductible when there is a claim? A: The Associations master policy is always going to be primary; how ever, for a claim to be paid, keep in mind all three of the following must be met for coverage to be provided: 1. There needs to be a covered case of loss 2. Damage must be to insured property and… 3. The amount of damage must exceed the Association’s deductible. If ALL three of these are not met, then the insurance policy is not going to pay for the damages, so it is import ant to remember the insurance does not come into play until AFTER the deductible is met and exceeded. Typically, the association’s governing documents or applicable law deter mines who is responsible to cover the amount of the deductible and the asso ciation’s board decides what deductible limit is best for your community. Over the years escalating claims pay outs and frequent larger losses have driven insurance companies along with com munities to entertain higher deductible options. The higher deductible can have several benefits to a community such as keeping smaller losses off the association’s master policy. This in turn will help with the loss history making the community more desirable to insur

If the master policy is “Single Entity”, then your HO6 building coverage will only need to be for an amount that would cover upgrades, additions, or alternations that you have done to the unit since the master in this case will be providing the coverage for the unit back to how the unit was initially conveyed from the builder. If your association policy is “All In”, then all upgrades including unit owner upgrades built into your unit at the time of the loss are included in the property coverage on the master policy so the building coverage limit will be minimal, if any at all. Regardless of which of the above coverage is provided by the asso ciation, you will still need the H06 policy as it will provide you with

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