HomeImportant InfoProperty Insurance

This letter reiterates and amplifies the Association's policy regarding the coverage, claims and deductible associated with the association's master property insurance purchased by the Association, and its relationship to the coverage that should be provided by your homeowner's insurance. In particular, we will focus on the deductible of the master policy, the relationship to your homeowner's coverage and the importance of adequate homeowner's coverage. Both are necessary for economically optimum insurance coverage for common area as well as individual unit losses.

Within the last two years, the Managing Board commissioned a review and assessment of the common area value and replacement cost. As a result of the increased value, we increased the Association's coverage for the common area property. Continuation of the same deductible would have resulted in a substantial premium increase. In light of this situation, we sought the advice and recommendations of insurance professionals familiar with Condominium and homeowners insurance. This was done with the objective of finding the most economical property insurance solution for all unit owners in an environment of escalating insurance costs.

Intrinsic to this solution is recognition of the economic desirability for coordination of property insurance coverage at both the Association and unit owner levels. For these reasons, we have adopted the claim policy described previously and, because of its importance, reiterated here.

For each claim made by the Association, the deductible for the master insurance policy is $10000. Insurance carriers have made it prohibitively expensive to have less than a $10000 deductible. Unit owners involved in an insured loss affecting their unit will be responsible for this deductible. An important point is that this deductible amount can be mitigated through homeowner property insurance maintained by the unit owner. Typically, such coverage can reduce the deductible exposure to $500 or less.

If more than one unit is damaged, or if one unit and common areas are damaged, we will apportion the deductible based upon the relative losses. The Board reserves the right however to assign the deductible to a given unit if that unit owner's tenants, guests, etc., caused the loss. Provided on the next page is two examples of typical losses at Dockside Place Condominium and how this property insurance deductible policy will work.

Example (a):

A leak causes water penetration in a unit and an interior ceiling is damaged. The total repair cost is well below the deductible, $500 for the floor and $700 for the ceiling. Although the master insurance policy covers the loss, it is below the deductible. Under the Association's claims policy, the affected unit owner(s) will contact their homeowner's insurance agent to process a claim and recover the repair cost. Losses below the deductible are the responsibility of the unit owner(s) involved in the loss. However, if the loss is due to a common area problem (e.g. roof leak, main drain back up, etc.), the homeowner's deductible (typically $250 or $500) will be adsorbed by the Association and reimbursed to the affected unit owner(s).

Example (b):

During a rainstorm, the roof is damaged resulting in damage to the interior of three units. The total repair cost of $6000 is apportioned as follows: $2000 for unit A, $3000 for unit B and $1000 for unit C. A claim is processed through the Association's master policy. The affected unit owners notify their own homeowner's insurance agents. The trust receives $1000 from the carrier, $6000 less the $5000 deductible. The deductible is apportioned based upon the relative losses and unit A receives a check for $350, unit B, $500 and unit C, $150. The affected unit owners receive the balance of the repair costs, less their deductibles, from their homeowner's property insurance carrier.

Under the Association's claims policy, each resident unit owner can cover the deductible gap with this or her individual homeowner's policy. As part of our investigations, insurance professionals have advised us that many companies provide this coverage to resident owners at no extra cost; others have a minimal extra premium. Of course, your deductible will apply to a loss, but on a homeowner's policy, the deductible typically is $250 or $500 rather than $5000. Note that for investor (non-resident) unit owners, the homeowner's coverage and policy details may be more complicated and require a separate policy. Investor owners may also want to make sure that their tenants have appropriate insurance.

We have enclosed the following important documents to assist you and your insurance agent in reviewing the Association's insurance deductible policy reiterated here and determining your individual insurance needs:

Schedule A - The applicable sections of the Condominium documents that relate to insurance.
Schedule B - Schedule of insurance for Dockside Place, containing a complete list of insurance coverage and deductibles for the Association.

You should contact your insurance agent promptly and take appropriate steps to ensure that you have proper coverage to meet your deductible obligation. If you do not have a homeowner's policy, commonly called an H06 policy, you are technically self-insured and, in the event of a loss, must pay the deductible out of pocket. The Association's insurance agent is Jeff Grosser of Rodman Insurance Agency. Jeff may be reached at (781) 247-7800. He is available to answer specific questions regarding the Association's master property insurance policy.

Please take the time to review the important information in this letter and file it in an appropriate place so that you can refer to it should the need arise.

Sincerely,
Jamie Chapman

For the Managing Board
Dockside Place Condominium Association