LEISURE WORLD OF MARYLAND MASTER  INSURANCE POLICY AND IT’S EFFECT ON INDIVIDUAL OWNERS INSURANCE COVERAGE

by Elisabeth Hargreaves

Master Policy – Property Insurance Coverage

The Master Policy provides protection against the loss of or damage to all buildings and structures owned by the Association by any peril, except those specifically excluded within the policy. This also includes contents owned by the Association. Furthermore, the Master Policy is written on an all-in coverage, which means coverage does extend within individual units to fixtures, appliances, walls, floor coverings (except area rugs), and cabinetry including any individual unit improvements, betterments, additions and/or alterations made by a unit owner. The individual owner of a unit must insure personal items such as furniture, china, area rugs, clothing, household linens, jewelry and all other personal items not listed here under a Personal Insurance Policy (HO 6). Coverage under the Master Policy for Property Damage is subject to a $5,000.00 deductible per occurrence. Such deductible amount is referred to the Association. This also means the Master Policy will cover claims only when the damage caused by any occurrence exceeds $5,000.00. There will be no coverage when the cost of the damage is less then $5,000.00 and these claims are the responsibility of the Association in full. However, the Maryland Condominium Act states that $1,000.00 of a deductible or loss below the deductible amount can be charged to the unit owner. In order for an Association to do so, it has to be stated in the Association By-Laws. In the event that the loss was the result of the negligence of the owner of the unit in which the loss occurred, the Association Board can hold such owner liable for the full deductible amount or, in the event of damages below the deductible amount, for that amount. Such liability is determined by an investigation of the occurrence.

Master Policy – General Liability Insurance

The Master Policy General Liability Insurance will indemnify and defend the Association against claims alleging negligence resulting in bodily injury, property damage, personal injury or advertising injury. There is no deductible under this coverage. Coverage is afforded to protect unit owners against liability claims arising out of membership in the Association. For example, if somebody slips and falls on the common elements, the Master Policy will indemnify and defend all unit owners and the Association against a liability claim which might result. However, if anybody slips and falls or otherwise sustains bodily injury arising within an individual unit, the Master Policy liability coverage will not apply. To cover a unit owner against any liability claim arising from an occurrence within the owned unit, sufficient coverage has to be purchased under your personal insurance policy.

Unit Owners Personal Insurance Responsibility

As a resident, you should be aware that the Master Policy does not eliminate the need for individual unit owners to purchase Personal Insurance. To be adequately insured see or talk to your agent and discuss your personal homeowners ( HO 6) policy. This policy, under either Building or Dwelling Coverage, will cover the repair costs resulting from an occurrence not covered under the Master Policy, including the deductible portion assigned to a unit owner. Some Insurance Companies show this coverage under Buildings and Alterations coverage in your policy. Most HO 6 policies carry $1,000.00 coverage for this protection at no additional charge. However, due to the deductible amount under the Master Policy it is recommended that unit owners purchase a minimum of $5,000.00 or more. The cost of this coverage is relatively minimal.

The Personal Insurance Policy also carries liability coverage to defend the owner against any claim arising from accidental occurrences within their unit. This coverage only covers claims from visitors to your unit; persons residing in your unit are not covered.

Your Agent should be able to advise you on and explain to you your HO 6 policy coverages.