The Association carries liability, theft/fidelity bond, and property & casualty insurance coverage, as required by the by-laws and Maryland Condominium Act. This insurance coverage is also known as the “master insurance policy.”
The property & casualty insurance primarily protects “common element” property from damage caused by fire, severe storms, and other hazards -- i.e., “named perils” specified in the insurance policy. TOP’s current policy has a $5,000 deductible, but both the deductible amount and the type of damage insured against can vary from year to year based on the coverage purchased and in-force. And the by-laws stipulate that the owner(s) of the units(s) incurring an insured loss must reimburse the Association for the first $1,000 of the deductible amount. (Article VIII, Section 4(b)).
Even though the Association carries property insurance, each homeowner is strongly urged to purchase separate homeowner’s insurance (referred to as H-6 insurance for condominium owners). For example, the master policy DOES NOT cover damage to exterior additions such as decks or sheds, nor does it cover damage to or replacement of personal property (furniture, clothing, electronicequipment, etc.). Damage to the interior of the unit (walls, ceilings, floors, appliances and fixtures) is only covered in limited circumstances – for example, if damaged by fire but not if the damage is caused by a roof leak (see below). Nor does the master policy provide personal liability coverage – for instance, someone falling down the stairs inside your home, or if your dog bites someone, or if an overflowing bathtub damages your and the adjacent unit. Moreover, your individual homeowners’ insurance could reimburse you for your share of the master policy deductible, or pay for temporarily relocation costs while repairs are made.
Please contact the Zalco property manager if you have any questions about TOP’s master insurance policy or if you think that damage to your unit may be covered under the master policy. Do not contact TOP’s insurance carrier, since this counts as an “insurance inquiry” and may trigger an increase in TOP’s insurance premium cost.
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TOP has been advised by its attorney that the Association is NOT liable for interior repairs unless: (a) damage can be proved to be the result of the Association’s negligence; or (b) the damage is covered by the master insurance policy (i.e., from a “named peril” and restoration is included in the insurance coverage). Thus, if the roof leak is caused by a popped nail (normal wear & tear), the Association will repair the roof (a common element) but isn’t responsible for any interior damage caused by the leak.