V.S. from Miami, Florida writes:
Dear Mister Condo,
I have a mortgage on this condo. It’s free-standing not connected to another condo. Our declarations clearly state anything that breaks inside the condo is my responsibility. Had a pipe break in the bathroom upstairs lot of damage. Called my mortgage company they said I had no escrowed insurance for damages. Isn’t that required by law?
Mister Condo replies:
V.S., since I am not an attorney, I cannot give you a legal opinion on your issue. The agreement between you and your mortgage company is just that. If the agreement doesn’t require insurance for your unit interior (most don’t), then interior damage is your responsibility. Many condo associations require unit owners to have individual homeowner coverage. Mortgage companies traditionally require that the association have a Master Policy and Flood Insurance, Earthquake Insurance, etc. depending on the part of the country where you live, in place so that the unit’s replacement is assured in the event of a destructive event. Interior damage doesn’t really matter to the mortgage company as it isn’t going to destroy the property’s resale and value as collateral for the mortgage. I am sorry that this wasn’t explained to you before this accident occurred. I strongly encourage you to speak with an insurance professional and purchase your own homeowner’s policy to protect you from future matters like this. All the best!
As a Board member of a Condominium Association in New Hampshire, I have to agree with the reply you received. I also am not a lawyer, but if your mortgage holder doesn’t require loss protection (which would protect just the lender I assume), the ball was in your court to protect yourself. What I find surprising is that your Association does not require some level of homeowners coverage for the interior of your unit/HO-6 provision (or at least strongly advise it). Also, if you do HAVE a homeowners policy of some sort, why your insurer didn’t offer or at least advise HO-6 coverage at the time of purchase of the policy is almost negligent, in my opinion..unless you declined it.
Last year, we had a unit in our association go up for sale. The inspection disclosed hidden wall rot from moisture in an exterior wall accompanied by a heavy infestation of termites. The buyers required a full repair (about $7000) of the damaged area before completing the purchase but fortunately, the repairs fell under the responsibility of the owner’s HO-6 policy so neither they nor our Association were stuck with the repair bill.
A condominium is your home; stand-alone or part of a large complex makes no difference. Why you didn’t have coverage for an interior disaster is unfortunate. I expect that you insure your car, have life insurance and so on. Why would you not adequately insure what is probably your biggest investment? Again, I agree with the initial reply. Find a trustworthy insurance agent and purchase thorough homeowners coverage with an HO-6 provision. I think you will be surprised at how little it costs. Then, hope that you never have to use it. Better safe than sorry….
You have learned a very costly lesson and I AM sorry!