Coverage guide · condominium

The unit, the association, and the line drawn between them

Owning a condominium unit means two purchases stand behind one building: the unit owner’s policy and the association’s. The California Department of Insurance describes both, and reading them side by side before a loss is easier than reading them afterwards.

What a unit-owners policy is written to carry

Like renters insurance, the Department says, condominium unit-owners insurance provides coverage for personal property, loss of use, personal liability and medical payments to others. That is the same four-part shape a tenant buys, and the comparison to a renter’s policy is the Department’s own. A unit owner reading a quote should be able to point at each of the four and say what number is standing behind it.

The part that is genuinely yours to maintain

What the Department adds for a condominium is the piece that has no equivalent in a renters policy: the unit-owners form also includes coverage for damages to the interior of the unit and improvements for which the unit owner is responsible to maintain in accordance with the governing rules of the condominium association. The phrase doing the work there is “in accordance with the governing rules”: what the unit owner is responsible to maintain is set by the association’s governing rules, and the coverage the Department describes follows that responsibility rather than defining it.

Loss of use at forty percent of the personal property limit

The proportion to check on a condominium quote is not the one a house owner watches. For the unit-owners form, the Department states that coverage for loss of use is generally limited to 40 percent of the personal property limit. That is a share of contents cover, not of any dwelling figure — and it is a different fraction from the one a renters policy uses, where loss of use is quoted as 20% of Coverage C. Two similar-looking forms, two different percentages, both anchored to personal property.

Loss assessment, and the earthquake question folded inside it

Loss assessment, the Department says, may be an important coverage for you to consider, because it covers you for certain assessments that the condominium association makes as a result of a loss. It then attaches a specific caution to it: check whether that coverage applies to earthquake, and how much it would provide in the event of an earthquake loss. This matters because the standard residential form leaves earthquake out — the Department lists it among the perils usually excluded — while California answers that exclusion from the other direction: the duty to offer earthquake cover for an additional premium falls on whichever insurer writes the homeowners coverage. So the earthquake question reaches a unit owner from two directions: what the unit-owners policy itself does with the peril, and whether loss assessment coverage would answer an assessment made after an earthquake loss.

Reading the association’s policy before a loss makes you read it

The other half of the split belongs to the association. The condominium association generally purchases insurance for the building structure and common areas, such as corridors and walls, and the Department’s advice is direct: carefully review the type of insurance your association has and how it would affect you in the event of a loss. That review is what tells a unit owner which type of insurance the association actually carries, and how it would affect them in the event of a loss.

Two rights that attach to the purchase itself

Wherever residential cover is placed, the Department records an obligation on the person selling it: your producer must provide you with a copy of the current Department of Insurance pamphlet “Residential Insurance” when placing residential coverage. It also records something worth asking about rather than waiting for. Companies sometimes offer discounts for burglar alarms and fire protection devices such as smoke detectors, alarms and sprinklers, and the Department’s instruction is simply to ask about the discounts available through the companies you are considering. Where a building already carries devices of that kind, that is an easier question to ask than to answer from memory.

None of this is settled by a brochure. The maintenance boundary runs through the association’s own governing rules, the unit-owners policy and the association’s policy are separate purchases, and what either one covers is settled by the documents as issued. A unit owner who can name the four coverages, the 40 percent loss-of-use share, the maintenance boundary and the loss assessment position is holding the whole question.