Although apartments (condominiums) have been around for a long time, they have gained popularity in recent years. As the population ages, retirees choose apartment housing so that they can enjoy home ownership without many of the associated maintenance problems that become difficult as they age. Apartments are usually smaller than many single-family houses, so it is a good way to "reduce".
At the other end of the spectrum, many young people choose to buy an apartment for similar reasons – without the hassle of maintenance and upkeep while living their lively, moving lives. They also appreciate the opportunity to build equity by owning the property instead of simply paying rent for an apartment.
No matter what category you may fall into, there is often confusion when it's time to insure the apartment ̵
Let's start by discussing the differences between Ohio homeowners insurance and Ohio condo insurance (because they are different). We then move on to the two main types of apartment agreements and how apartment insurance reacts to these agreements.
How is apartment insurance different from homeowners' insurance?
The main difference lies in which part of the building you own and which part you are responsible for insuring. A typical homeowner's insurance insures an entire home (such as a single-family home). When you buy a single-family house, you are responsible for insuring the entire structure (and if you have a loan, you are definitely responsible for the whole thing!)
When you buy an apartment, the apartment is usually part of a larger association (think a group apartments). The association usually owns some common areas (think of a clubhouse, a pool, green areas, streets and maybe even sidewalks), but usually owns a part of each apartment. The parties to an apartment agreement are the association and the individual unit holders. So each party is responsible for insuring part of the apartment based on the apartment agreement.
What are the two types of apartment contracts?
- Bare walls Concept – The unit owner is responsible for insuring all construction objects that are defined as part of the unit in the declaration of ownership.
- Concept with broad form (single unit) – All building materials are insured by the association. The unit owner is only responsible for objects of personal property.
What do these two apartment contracts mean?
First off-Bare Walls. The agreement states exactly what the apartment association is responsible for insuring and what you are responsible for insuring. In the apartment agreement, for example, it can be said that the association is responsible for insuring the "common elements", while you are responsible for insuring your "unit". Examples of common elements include the apartment property that is not part of the unit and facilitations through the unit for the provision of public utility services to units and common elements (think pipelines, pipes, etc.). The unit is usually described with references to ceilings, floors and walls, and it is a VERY specific description.
The most typical example we see is a variation of the Bare Walls concept – the association is responsible for insuring the structure itself and the unit owner is responsible for insuring the walls inwards. This would include plaster and anything attached to plaster, such as fixtures, countertops, cabinets, closets, etc.
Second-Broad Form. According to the agreement, the association is responsible for insuring all construction objects. The unit owner is only responsible for insuring personal property.
How do these two apartment contracts relate to my apartment insurance?
Let's start with an example of a typical apartment policy (HO6 in the insurance world).
Coverage A – Building
Coverage B- Independent Structures
Coverage C- Personal Property
Coverage D- Additional Cost of Living
Coverage E- Personal Liability
Coverage F- Medical Payment
Hmmm… .. looks a lot like homeowners insurance in Ohio right? The truth is that the two principles are very similar, with a few exceptions.
The Bare Walls concept directly affects coverage A. Broad form concept affects coverage C.
Most apartment policies include a small amount of coverage A automatically – $ 1,000 is common. With the wall-only concept, you are responsible for insuring your device. Depending on how your device is defined, you decide how much coverage A you need.
For example, if your unit is defined as "internal plaster," you may need a coverage amount of $ 30,000-40,000 dollars to cover cabinets, countertops, and other wall-mounted items.
If your contract is broad, you are responsible for insuring your personal property, which is coverage C. You may set how much coverage you need. Maybe it's $ 25,000 or even $ 100,000. But that number depends on how much "stuff" you need to insure. And if you ever question what is considered to cover C, I always offer this example: Imagine turning your apartment upside down. Whatever falls out is personal property.
The moral of history
It is SUPER important to know which agreement you sign and how it works. Only then do you know the right way to insure both the structure and your personal property. You do not want to find out at the time of injury that you have the wrong coverage!
How do you know which apartment contract you have? And if you have the right apartment insurance in Ohio? If you are unsure of your coverage, call us at (937) 592-4871 or fill out the form below. We are happy to talk to you and make sure you get the right condo insurance!