In a Condominium Association, there are two documents that govern how the building must be insured: the Master Deed and the By-Laws. Usually, the Master Deed will determine who owns which portion of the building. Your Master Deed explains what part of the building is a Common Element (owned by the Association) and the Description of the Unit (owned by the unit owner). The By-Laws generally determine whose responsibility it is to ensure these different elements (regardless of who owns them)
How Do I Determine An Accurate Replacement Cost For The Association Building?
While there are various ways to establish the value of your building, there is only one true accurate method. A Replacement Value Appraisal of your building is one of the most valuable pieces of information you can have.
It can be used to protect you from:
- Coinsurance penalties
- Over-insuring the property
- Determining the value of the interior of each unit
Market value and assessed value are not used in determining an insurance value. Insurance is based on building costs. The cost to rebuild your building in the event of a fire or other catastrophe. Condominiums are unique in the fact that most Associations are responsible for insuring the main structural walls, roof, foundation, etc. but each unit owner may need interior building coverage for their cabinets, carpeting, bath fixtures, doors, windows, and built-in appliances, depending on exactly what the Condominium documents say.
Using your Master Deed and By-Laws as a guide, the Appraiser can determine the value of the building that the Association must insure as well as the amount of building the unit owners must insure. It is your responsibility to read your Master Deed and By-Laws and ascertain the amount of insurance that you need to carry. Once that is determined, we, as your Insurance Professional, can advise you on the best way to protect and insure that property.