Knowing how to proceed and how to get things done is often vitally important. But that isn’t enough by itself; it doesn’t stop there. It is also equally important to know what you should NOT do, what errors to avoid. One way to achieve that is to discover what mistakes others have made and then make sure to avoid them.
That’s particularly true for obtaining property insurance for condominium associations. Many associations steer clear of the mistakes and succeed in getting their association properly and adequately insured. You would like to be one of these. Presented below are a few ideas to consider when obtaining property insurance for your condominium association, which could save you money.
Make sure that the proper construction items are included.
This is very important because including unnecessary building components leads to buying more insurance than you need. To avoid this problem you will want to have the appraisal segregate costs for all of the building components. For example, typical hazard policies do not include the following components: foundations, excavation, piping below ground, finished carpentry, cabinets and countertops, plumbing trim, electrical trim, and ceiling fans, interior paint, flooring, bath tile and tubs, and built-in appliances. These items are detailed in Florida Statute 718.111(11). So when you review your insurance appraisal, it should not have included costs for any of the above items. Think of it this way: your hazard insurance policy only covers primarily the shell of the building.
Make sure that you’re not over-insured personally.
This can be a crucial element in that unit owners also typically buy coverage for the interior of their unit. To avoid the bad results of this kind of frequent error you should have an H06 policy that accurately covers your interior items. It is not uncommon for unit owners to be 150% – 200% insured when they combine their portion of the hazard insurance policy and their individual H06 policy. That may make the insurance company happy, but you are buying more insurance than you need. The interior items that should be covered in the H06 policy are listed in the above paragraph.
Make sure you hire a qualified and competent appraiser.
This challenge is encountered when the board of directors or property manager obtains bids from appraisers. The way to find a competent appraiser is to ask for their qualifications and a list of similar projects they have appraised. Please remember that the cheapest bid to perform the appraisal is not always the best. One reason that an appraisal cost from one organization may be lower than others is that the appraiser does not go into great detail on the property inspection and appraisal itself. Any appraiser can come up with an overall value of improvements, but not every appraiser can come up with the proper value and segregate the costs properly to show you what is included and not included.
You should carefully consider these ideas when obtaining property insurance for your condominium association. As an alternative, stick to the recommendations earlier mentioned for doing it properly. You will then be able to obtain much better results.