Is Your Condo Underinsured?

MetroBoston, Publication Date June 27, 2012
By Attorney George Warshaw

Even condos suffer fires. Lenders are now requiring “walls in” coverage for condos, but what does that mean?

Every condominium has a master fire and casualty insurance policy covering the bricks, mortar and common areas – but does the master policy cover the walls and cabinets inside each unit as well? Maybe.

There are three types of master condo policies: “all-in” (or all-inclusive), “single entity,” and “bare walls.”

“Take the apartment, turn it upside down and shake it,” one insurance agent told me. “If it doesn’t fall then it’s covered by the ‘all-in’ policy. This policy also covers any improvements made to the unit – new cabinets or renovations

The “single entity” master policy is the same as the “all-in” except that it doesn’t cover any improvements made since the condo was created.

“Bare walls” covers common areas only – and not any interior walls or the fixtures inside a unit.

Make sure your condominium documents require the right coverage – and that your agent is providing you with that coverage.

One last word on insurance. It’s sometimes worthwhile to get your personal unit owner’s policy from the same insurance carrier or agent that handles the building. You may be able to avoid finger-pointing by two different insurance companies in the event of a claim.

© 2012 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.