Insurance is a topic most people like to avoid, but it is an important one. As owners or landlords, we all have to be responsible and carry the proper insurance for our homes.
Who’s responsible for what? It’s an important question often asked by owners, and the answer is sometimes more complicated than you’d think.
Every Association is required to carry Property, General Liability, Crime, and Directors & Officers Liability Insurance. With all of that insurance, one would think everything is covered, but as an individual owner, you still need to insure against damage to your physical unit and contents.
Generally speaking, the Association is responsible for repairing or replacing common (shared) elements, and owners are responsible for maintaining their own homes. There are challenges as some areas are neither common nor part of your home. These are called “exclusive” or “limited-use” common areas since they are available only to one or a few residents. Who is responsible for these and who is responsible for repair and replacement are not necessarily the same thing. Needless to say, it gets confusing.
To make answering the question easier, an Association’s Declaration & By-Laws include information that indicates who is responsible for each component. The information details the components and states whether it is an Association or owner responsibility. Every Association is different so it’s important to be familiar with your Association’s specific Governing Documents.
Mike Minsky, a Partner at BKS Rosenthal, states, “A common misconception is that the Association’s insurance will cover all the repairs inside a unit. In the case of unit damage caused by a common element, such as a roof leak, according to the Illinois Condo Act, the Association is responsible for repairs and remediation of common elements; drywall and primer are considered common elements and are covered under the Association’s policy. Painting, flooring, carpeting, and personal belongings are covered under the individual’s insurance.”
You should always consult your insurance carrier to ensure you have enough coverage for your personal belongings. If you have expensive artwork, jewelry, or collectibles, you might need an extra rider to cover those items in the event of damage or theft.
While the information is fairly comprehensive, you may still have questions. If a component isn’t listed, check with your Advantage Property Manager for clarification. It could have been overlooked at the time the documents were prepared. The Board of directors may pass a clarifying resolution assigning responsibility for any items not included.
When shopping for your own insurance, it is in your best interest to send a copy of your Association’s Declaration & Bylaws to your agent. It is best to be prepared just in case.
If your Association allows you to rent out your unit, you are now a landlord and should consult with your insurance carrier on the type of insurance that best suits the situation. You also want to ensure your tenant is carrying renters insurance. You want to avoid being responsible for their belongings in the event a claim needs to be filed.
Consult with the experts and review your governing documents to ensure you have the coverage you need.