are original to the unit. Original means that it is the exact item that was in the unit when the developer originally built the unit. The level of this coverage is determined by the insurance agent based on the declarations of the association.

Need Insurance Information?

The CAI website is a great resource. www.cai-illinois.org.

For a condominium association, the declarations further clarify who is covered and for what. It is the responsibility of the association to ensure that the policy purchased directly reflects the coverage determined in the declarations. It has become standard practice that in a condominium association claim, the combined wording in the declarations and the Illinois Condominium Property Act will determine coverage.

For a townhome association, there are no laws regarding who is covered and for what. Townhome and other common interest communities (other than condominiums) have coverages that are specific to their governing documents. Like condos, the association is responsible for insuring its interest and the unit owners are responsible for insuring their interest.

Unit Owner Responsibility

For the unit owner’s dwelling coverage, this policy is including, but not limited to: carpeting and all floor coverings, wall coverings, sometimes paint, fixtures, lighting, and any upgrades, also known as betterments and improvements. It also includes loss of use coverage, otherwise often called additional living expense. This covers your additional living expenses in the event that you are not able to live in your unit. In the perfect world, it would be advisable to say that a condo unit dwelling coverage should not be less than $50,000. Of course, there are scenarios where this coverage amount is more than ample and others where it simply is not enough. Your insurance agent is the best person to help you determine your coverage amounts. As a rule, please consider all of the above structural items when determining coverage.

Types of Coverage for Unit Owners and Renters

H03 Policy = Homeowners Insurance Policy. This policy provides all risk coverage and general liability for a single family type of home. The only coverage not covered is specifically excluded from the policy in writing. There are times when a townhome belongs to an association and it requires an H03 policy. Please be sure to refer to the association’s declarations when purchasing insurance for a townhome unit.

H06 Policy = Condo Insurance Policy. This policy covers the dwelling, personal property, and general liability of a condominium unit. Be aware that the coverage amount for dwelling is different than the coverage amount for personal property. They are two separate entities within the same policy.

H04 Policy = Renter policy. A policy that covers only the personal property and general liability of a tenant of a unit that is owned by another entity. Basically, just the personal belongings: clothing, furniture, linens, etc. In other words, if you were to take your condo and turn it upside down, everything that falls out is personal property.

Landlord Policy = This policy is for the dwelling only and also covers loss of rental income. Typically, this policy is used by investors.

Deductibles and Who Pays What:

In the event of an insurable loss where the common elements and/or limited common elements are damaged, the association’s policy would cover the loss. Therefore, the association is responsible for the deductible on that loss.

If a unit suffers from an insurable loss, the unit owner’s policy would cover the dwelling and personal property. Thus, the unit owner is responsible for the deductible of their insurance policy.

If an insurable loss is caused within a unit, where it affects the common elements, the association does have the right to charge back the association’s deductible to that unit owner. In that scenario, the unit owner would be responsible for the deductible on their unit as well as the charge back of the deductible on the association’s policy. Section 9.1 of the Illinois Condominium Property Act explains more detail of this topic. You can find the Illinois Condominium Property Act on the CAI website at: www.cai-illinois.org.

At the end of the day, it comes down to protecting yourself and the obligations you have as an owner. As many of the insurance company’s commercials say; “We’ve got you covered”, “You’re protected” and things of the like. But ask yourself, “Am I really covered?” and “How do I know?” A great starting point is to ask your insurance agent. They are, more often than not, more than happy to provide you with the education you need to make good decisions about your insurable obligations and coverages. Another great resource is the CAI website, as stated above. Think about the fire discussed at the beginning of this article. After the fire happens is not the time to ask about coverage. Be proactive, and start the process now. If you’re covered, then you’re ahead of the game!

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