BALTIMORE – To assist consumers who own a condominium, the Maryland Insurance Administration’s Consumer Education and Advocacy Unit has developed materials to explain the basic insurance requirements for this type of property.
“Our Consumer Education and Advocacy Unit fields a variety of insurance related questions every day from Marylanders,” said Insurance Commissioner Al Redmer, Jr. “This Consumer Advisory is just one way we work to educate citizens and help them navigate matters related to insurance coverage. We also spend time out in the field to make ourselves available as a resource to the community.”
What types of insurance coverage is there for a condominium?
o The unit owner’s policy is purchased by the unit owner and provides coverage for their contents and personal belongings, additions, alterations and betterments, liability coverage and additional living expenses following a covered loss. The policy may also provide coverage, subject to certain terms and monetary limits, for a unit owner’s share of a common area claim if it exceeds the master policy limits or is less than the master policy’s deductible. This coverage is known as loss assessment coverage. Consult with your insurance company or agent to determine how much loss assessment coverage is included with your policy and whether or not you wish to purchase more.
What is covered by each type of insurance policy?
Additions, alterations and betterments include upgrades made by the unit owner post- construction. This may include such things as upgraded flooring, built-ins like bookcases, upgraded kitchen or bathroom cabinets, etc. If there is a covered loss, the master policy will generally only pay to replace or repair damage for the unit as it was originally built, and the unit owner’s policy will pay the additional cost needed to return the unit to its pre-loss condition.
When a loss occurs that originated from a condition in a single condominium unit, but that is covered by the master policy, the owner of the unit where the loss originated may be assessed by the Association up to $5,000 of the master policy deductible expense. However, if a loss occurs that originated from the common elements rather than from one individual unit, Maryland law provides that the master policy deductible is a common expense of the Association. A unit owner should ask the insurer or insurance producer if the policy’s loss assessment coverage will apply to an assessment for the Association’s master policy deductible expense. Please note, as outlined in the Maryland Insurance Administration Bulletin 9-22, each unit owner is an insured under the master policy and may make a claim for a covered loss under the master policy. Such a claim cannot be blocked by the management company. While a management company may act as a conduit for claims being made under the master policy, it cannot refuse to present a claim for a unit owner.
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