6 questions to ask your Homeowner’s Insurance Agent

HOA Insurance Policy Challenges: Many of you are aware that our HOA has had challenges in getting insurance companies to cover our community policy. We’ve had several frozen pipe/water damage claims over the years making Montclair “high risk” for most companies to offer coverage. This year our property manager recently found one carrier willing to cover us for $10,000 less than our current carrier. While this is good news, we are still overpaying for insurance.  To appeal to other insurance companies, we have to be clear of any homeowner claims for 3 years in a row. This is the only way to be considered by other providers and then perhaps we can be eligible to decrease that community cost in our HOA budget

Call your Homeowner’s Insurance Agent

Be informed of what is covered and not covered. Unfortunately, there is no standard way or specific wording to confirm coverage when reviewing your personal policy because each policy is written differently by the varying insurance carriers. The best way to confirm coverage is to call your carrier and ask what is and is not covered under the Water Damage section. For example, some policies only state what is excluded under water damage and therefore all other scenarios are covered. However, there can be some caveats with coverage such as improper use, owner neglect (existing issues that are not addressed), or even proof of a required maintenance plan where the insurance company would not be liable for coverage. No one wants to be surprised by their insurance coverage in the event of an emergency, so we recommend identifying what your policy covers in the event of fire sprinkler water damage. 

Important: Please note that the amounts recommended in this article are opinions based on past incidents. Base your coverage on your specific unit needs and after consulting with your insurance agent.  

Below are 6 questions to ask about your policy.

  1. Do I have an H06 policy in place (supplemental personal policy to the HOA Insurance Policy)?
  2. What is included and not included under Water Damage in my policy?
    1. Home Coverage: Coverage for rebuilding your home structure (ex: floors, cabinets, sheetrock, etc…) from the “walls inward” is generally called “Dwelling Coverage” or “Building Property” on your Declaration Page. Ask your agent about the dollar amount but we recommend a minimum of $75,000 coverage based on previous claims.
    2. Personal Property Coverage: Coverage for all other personal belongings that are damaged (ex: furniture, clothing, electronics, etc…) is generally called “Personal Property” or “Personal Contents” on the Declaration page. Everyone’s value of personal property will be different just make sure you have the coverage you are comfortable with if you ever needed it.
  3. Am I specifically covered for water damage from my fire sprinkler system due to frozen pipes, leaking, or water released from fire/smoke?
  4. Is there anything that would negate the water damage coverage? If so, would a sprinkler system inspection/maintenance plan ensure I was covered in that scenario?
  5. What is the Loss Assessment coverage amount in case I have to file an HOA insurance claim? 
    1. “Loss Assessment” on the personal homeowner’s insurance Declaration page is used for any common area community damage where HOA would have to pay and delegate an assessment to the homeowners (ex: gazebo damage). This also covers any deductible the HOA Insurance Policy requires when a homeowner files a claim. we recommend a “Loss Assessment” coverage amount of $10,000 to cover any community damage assessment or external structure damages (ex: roof) requiring an HOA policy claim so you are not stuck with a high deductible.
  6. Would you mind looking at my HOA Insurance Policy and making sure my personal homeowner’s policy covers everything it does not? (We strongly recommend submitting the new HOA policy to your personal carrier.)