Momentum - Business to Business Online Magazine | Page 29

• Mortgage amount. Since the original mortgage
amount may be simply a function of the unit purchase
price, this is as unlikely as the purchase price to be
an accurate measure for the appropriate amount of
insurance.
• Replacement cost per square foot. A contractor
or architect who specializes in condominiums or
apartments – especially the original contractor who
built your condominium project or the original
architect who designed the condominium – may
be able to provide an accurate estimate of the unit
replacement value.
• Appraised value. An experienced professional
property appraiser should be able to accurately
determine the replacement value of the real property
excluding the common elements.
• Your Insurance Agent. Your Insurance Agent can
estimate replacement cost for you using a Replacement
Cost Estimator.

Loss Assessment Coverage.The Texas condominium
law and your condominium declaration allow a unit
owner to be assessed for financial losses incurred
by the condominium association. Most standard unitowners policies automatically provide additional
coverage for such assessments, but sometimes only
up to an amount as small as $1,000. Most insurance
companies offer higher amounts for a small additional
premium. Consider purchasing the maximum amount
that is available on your policy.
Whether you decide to insure your Condo for its full
replacement cost value or for the replacement cost
of the unit itself, it is important to include all flooring,
cabinetry and fixtures when calculating Replacement
Cost. If there is a Condominium Master Policy in place,
you will still be responsible for damage from the studs
in on your unit.

Once you determine the full replacement value of the
unit, then you can decide whether to insure that amount
or something less, based on your tolerance for risk or
how much you can afford.
As an alternative to purchasing an amount of insurance
that represents the full replacement value, consider
purchasing an amount not less than 25 percent of the
full replacement value or the amount of the association
deductible, whichever is more. This is an arbitrary
percentage, but it is more reasonable than selecting a
smaller amount such as $5,000. Coverage on condo real
property is relatively inexpensive on a unit-owners policy,
especially when considering the consequences of not
having enough insurance.
Personal Property. Everything that’s not tied down to
the real estate in your condominium unit is considered
personal property and must be insured separately from the
unit real property discussed above. For help in determining
how much coverage you need on personal property, it is
important to consider ALL of your personal property.This
would include, furniture, electronics, clothing, linens, toys,
luggage etc.
Important Options to Consider
The typical unit-owners policy contains significant
exclusions and limitations. Some of these can be eliminated
or modified at the unit owner’s option. Be sure to ask
your insurance agent about these and other options that
may be available.
Special Causes of Loss Forms. The “standard” unitowner’s form doesn’t provide the same broad coverage
provided on a “standard” homeowners policy purchased
by owners of single-family residences. Optional “special”
forms expand the types of losses that are covered on the
unit-owners policy.
MOMENTUM / Summer 2016

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