ALL TOWNHOUSE/CONDO OWNERS MUST READ

There is quite a bit of uncertainty here in Utah when it comes to how you insure your condo or townhouse. I've ran into potential clients that have reached out for a comparable quote for insurance only for me to discover that they were being wrongfully insured. 

When someone goes to buy a townhouse or condo the HOA is most likely involved. This community you are buying into can have some weird stipulations and requirements, which can change and cause some confusion surrounding multiple issues. The insurance of your unit always seems to pop out at me when getting quotes for my potential clients. My clients either don't know how their unit is insured, or they don't know how they want it insured. 

In 2011 Utah State Legislation passed a law titled, “Condominium and Community Association Revisions”. This is something all agents should currently be aware of, because this law directly affects your insurance on your unit. The HOA calls the policy required by law a "master" policy which the HOA is required to provide to you. The policy essentially covers the building, including the "betterment's" and "improvements" installed by you the unit owner. What is NOT covered is your personal property and your exposure to liability claims. 

Simple enough, where is the confusion? The problem lies with agents who are unaware or choose to ignore these new requirements. The way the insurance used to work is the HOA would cover the outside walls and you had to cover all of the inside walls in addition to the personal property and liability. I know, it sounds ridiculous. "We will cover the outside walls" how dumb does that sound? Anyways, now that the law requires the full building to be covered you need to make sure you are paying for the right insurance! 

Now a days if you have an HOA policy you would want a unit owner policy on your townhouse or condo. This policy is very similar to a renters policy in the way that you don't actually cover the building but rather the contents inside and your liability as the owner or occupant. The only difference is you can add additional endorsements to this policy which are not found in a renters policy, and most importantly, you own the building. 

The importance of being aware of this, is subjective. If you don't mind paying more money for an old policy that is double covering you for what is already covered then there is really no problem. But most people I know want to pay for only what is necessary and don't like to overpay. The situation I have found is an agent gives a policy to the unit owner and they give them the requirements of the old policy. So now the owner is covered by the HOA for the whole building in addition they themselves are paying to cover the inside walls, which is already covered... Please be aware of this requirement and make sure you are paying for what is needed and that you aren't paying more money for something that is already covered, it could save you a couple of hundred of dollars every year!

To read more on the Utah Legislation head over to this Utah.Gov PDF.