Most people think that having condo insurance is like having renter’s insurance, you need to cover your personal possessions and the rest is covered by the master policy of the HOA, right? That’s what you pay your HOA dues every month for…well, sorta right. Here in Utah we have Utah Condo Law that specifies ,( well , they didn’t really put it like this, being an official law and all, but this is what it means), if you took your unit and turned it upside down, everything that falls out is what you as a homeowner would be responsible for insuring. Pretty straight forward, right? Well, the fly in the ointment is that community CC&Rs (the bible by which Condo and PUD communities live by) can override this very same provision in the law!
First, a bit of background.
This is the story (true by the way) of an older lady who lives with her daughter and grandson in a beautiful condo community in Salt Lake. She , we’ll call her Freida (name is changed to protect the innocent) lives in a stack unit community (apartment type condo where there are 3 levels). Frieda and her family and 2 cats live on the first level.
One day in December (well, more like a week I guess) we had sub freezing temperatures, which unbeknownst to anyone, froze a fire sprinkler pipe up in the attic of the top unit (which is technically common space since it is directly under the roof of the building). So….
When the weather warmed up, the frozen sprinkler pipe cracked, blowing out the sprinkler head and priming the fire system, which being the dutiful and reliable fire system that it was, began pumping hundreds of gallons of water through the pipes, drowning all 3 units beneath it. All 3 units suffered 10s of thousands of dollars worth of water damage.
The Hoa Couldn’t Help Frieda
The HOA (Home Owners Association) thought they had primary condo insurance (since the bad happened in a common area) so called their insurance company to begin the claim and start damage repair in all the condos, including Frieda’s unit. This was on a Saturday to boot, not too many folks around to consult with, so the idea was to get Frieda, her family and cats to a dry and warm place. She was quickly moved to a hotel where she could be comfortable during the month to 2 months she would need for the recovery of her unit. Incidentally, this happened the week before Christmas…talk about Yule tide cheer.
On the following Tuesday, the HOA got the news that their CCR’s specifically state that the individual owner’s condo insurance policy is primary, and the HOA policy is actually prohibited from covering ANYTHING inside an owners unit. Nada.., nothing,… not even a split hair on her cat’s head.
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So Now What?
The two homeowners above her had more than enough condo insurance to cover the damage, but Frieda and her agent had decided on minimal coverage to only include personal property and a slight structural provision of 18,000. The disaster clean up (removing the water, drying out the condo, and ripping out what was damaged, basically gutting the unit) alone amounted to more than 15,000, leaving her very little to replace sheet rock, insulation, baseboards, carpets, painting etc. and living in a hotel for 2 months.
Long story short (too late you scoff), she is now digging into her limited savings to cover the cost of her disaster.
If you own a home, whether it is a condo, townhome, single family home, twin home, modular home or tree house, Check out your insurance, talk with your agent, read your CCR’s, and make sure you are not under insured for your condo.