In the wake of the recent housing crisis, the mortgage industry has undergone a number of changes, including new loan requirements for those purchasing condominiums. Fannie Mae and other lenders now require their borrowers to have interior unit coverage for their condo unit.
These changes will affect many New York State condo purchasers and purchasers nationwide.
Many condo association policies only provide coverage for the building and common areas and do not offer interior unit coverage or personal property coverage. It’s important for buyers and current owners alike to investigate their master condo association policy, as it could reveal a major gap in your coverage. You can obtain a copy from your homeowners association, and we suggest you go over it with you insurance agent.
Condo owners required to buy additional insurance
Regardless, most consumers need whats known as a HO-6 policy that provides interior unit protection for things like drywall, carpet and personal items from perils such as: fire, lightning, smoke, explosion, wind, hail, freezing of plumbing and vandalism. The Tanner-Prince Agency offers policies that also include guest medical protection, additional living expenses, family liability, loss from theft and loss assessment coverage.
Loss assessment coverage is important because if the building or common areas of the complex suffer a covered loss and the losses are not fully covered by the master policy, the association may assess a certain monetary amount to all unit owners to cover the loss. Loss assessment coverage helps pay for the customer’s share of these assessments. For example if there is a $10 million settlement against the HOA, and there are 10 condo residents or units, each unit must pay their fair share of the settlement or about $1 million each.
If your thinking about purchasing a condo in one of the many beautiful communities in Orange, Ulster, Colombia, Dutchess, Putnam, or Westchester counties make sure you ask your realtor or mortgage broker about the new insurance requirements.