In the event that an earthquake was to strike your condo, do you know if you are covered through earthquake insurance? Knowing about the Condo Association policy held by the unit owners or renters could let you know if you are covered for this type of insurance.

If the condo association has purchased a separate policy of earthquake coverage then you can be certain that you are insured. The typical master policy insurance only covers the structure of the actual building and the surrounding public areas inside and out. Usually condo owners are required to purchase their own separate insurance policies for belongings, liability, and earthquake insurance.

If the earthquake were to damage the structure of the building, there would be a deductible that would needed to be paid for rebuilding. Knowing the cost per unit owner beforehand can aid to put aside that amount before the disaster strikes.

Learning later after the big one hits your condo is not an excuse for not having the right amount of coverage or the money to pay. The condo or building may be ruined due to the size of the quake leaving you with the loss of a home.

The condo insurance for earthquakes if purchased by the association may be a higher deductible with low premiums or a low deductible with high premiums. If you do not have the money set aside when an earthquake hits, it could be possible that you may have to endure legal action for the association to obtain the money to pay for rebuilding.

In the case there are around 8 condos that have taken out a $2,000,000 policy of earthquake insurance, the condo association has to come up with around $200,000 – $400,000. This is contingent on the deductible for the policy and is an estimated figure. With the deductible being so high, each unit would have to pay between $25,000 – 50,000! That is why it is necessary to know the deductible and have the money set aside in the event the big earthquake happens.

Here are a few ways that this could be taken care of with regards to paying the deductible.

- CEA loss assessment – In the event that the owners of the units have purchased the loss assessment policy either through the Master policy or individually, they would only need to pay a smaller portion of the deductible. This CEA assessment policy would pay the rest for the loss. This type of add-on insurance is a nominal fee each year depending upon the insurance company and other factors. Any condo owner can purchase this extra policy in order to protect themselves in this event.

- Pay the Deductible – the entire amount could be paid if the owner had it stored in the bank or through loans that would need to be paid back.

- Borrow Money – the Condo association can borrow the money for all of the owners who do not have the loss assessment coverage. The money borrowed would require collateral and the condo owner would then have a lien put upon their unit. Once the loan has been paid in full or the condo sold, the debt would be relieved.

- Foreclosure – In the case that the owner could not afford the amount for the deductible nor could the association borrow the money to pay, the bank would have to foreclose. The bank would then pay the amount owed to fix the unit for resale.

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Tags: Condo Association, Condos, Disaster, Insurance Association, Typical Master

This entry was posted on Monday, July 4th, 2011 at 8:25 am and is filed under Earthquake Insurance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.