Subject: 2022 – 2023 Insurance Annual Notice of Master Policy Deductible & Owner Responsibility
Hello Queen’s Landing,
Under Section 11-114 of the Maryland Condominium Act, condominium master policies must cover property damage to all of the condominium structure, including both the common elements and units as originally constructed and finished by the developer, with the unit owners providing individual insurance for their improvements and personal contents. Effective October 1, 2020, if damage originates in an individual unit, the owner is responsible for the insurance deductible under the condominium’s master policy, up to a maximum cap of $10,000. The statute provides: “If the cause of any damage to or destruction of any portion of the condominium originates from a unit, the owner of the unit where the cause of the damage or destruction originated is responsible for the council of unit owners’ property insurance deductible not to exceed $10,000.” Any remaining deductible amount remains a common expense.
Please know that for the term of 8/31/2022 to 8/31/2023, Queen’s Landing’s Master Policy is subject to a deductible in the following amounts:
- $10,000 per occurrence all losses except other named losses (listed below)
- $25,000 per occurrence wind/hail
- $25,000 per occurrence all losses resulting from polybutylene pipes
- $25,000 per occurrence earthquake
- 1% per building named storm (1% of any one building’s replacement value)
Queen’s Landing Council of Unit Owners, Inc insurance coverage is through Jacobson, Goldfarb & Scott, Inc. (JGS). At this time, we would like to pass on JGS’ brief overview of what coverages the Association has purchased, and what coverages should be purchased by the individual unit owners.
Insurance Provided by the Association through JGS Insurance
The Association’s insurance policy provides property insurance on the buildings, on a blanket basis. Included in the definition of the buildings are the unit’s fixtures, kitchen cabinets, interior walls, and carpeting as specified in the original building plans. The units are covered up to the standard builder’s grade for anything installed by the builder, excluding upgrades or additions.
Coverage is written on a “Special Causes of Loss” basis with a replacement cost endorsement. Please be advised that the policy is subject to a $10,000 deductible for covered losses that may be the responsibility of the unit owner. There is also a separate $25,000 per claim Wind/Hail deductible, which may be the responsibility of the unit owner.
Queen’s Landing Council of Unit Owners, Inc’s insurance policy provides liability insurance for the association on all common areas. There is no coverage for the individual unit owner’s liability under the Association’s policy.
Insurance to be Purchased by Unit Owners
You should purchase a Condominium Unit Owners Policy (also known as a HO-6 policy). This policy will essentially cover your personal belongings; furniture, clothing, fine arts, jewelry, etc. Any items of particular value over $2,000 should be appraised and scheduled onto your policy for the specified value. This coverage should be based on an all risk, “replacement cost basis”. This would replace your contents, if totally or partially destroyed by a covered loss, with new items, of like kind and quality, without depreciation. This would be subject to whatever deductible you choose. Sewer back up coverage should be requested for your personal contents and belongings. The Association provides this coverage for damage to the buildings, but not the contents of the unit owners.
A building limit (or Coverage A under the HO-6 policy) of at least $10,000 should be purchased. Some of the units, either when originally purchased, or since that time, have added upgrades; better carpeting or padding, different kitchen cabinets, fireplaces, wood floor, upgraded painting, etc. The additional costs of these upgrades are your responsibility. These would be covered under the “Additions & Alterations” section of the HO-6 Policy for the additional cost of any upgrades in the unit. We also strongly recommend that the HO-32 endorsement, or similar endorsement, be added to the policy. This will broaden coverage for Additions and Alterations to Special Causes of Loss versus named perils. Unit Owners should also advise their personal insurance agent of the Association’s property deductible, to ensure coverage is added to the appropriate section of their policy. Depending on the insurance carrier, these deductibles are typically covered either under the building limit, Coverage A, or as a loss assessment.
Also included in the HO-6 policy is personal liability of the Unit Owner(s). This covers the individual’s personal liability arising out of the ownership of the unit, and we recommend a limit of at least $500,000. Additional coverages that should be considered under your policy are; loss assessment, coverage for a liability assessment if levied onto the unit owners by the association. Extra expense and loss of use, if your unit becomes uninhabitable by a covered loss, your additional cost to relocate temporarily would be covered under your HO-6 policy. Coverages should be discussed with your personal Insurance Agent to tailor your coverages to your specific needs.
Unit owners that lease out their units should purchase a fire policy that would cover their unit’s upgrades, any contents furnished in the unit, along with scheduling the personal liability arising out of the ownership of the unit onto your primary homeowner’s policy. Additional coverages to be considered are loss of rents, if the unit becomes uninhabitable due to a covered loss, the loss of rents could be covered under this policy. Loss assessment is another important consideration.
The unit owner should require that the tenant’s purchase a “Tenants Policy” (also known as a HO-4 policy). This would provide coverage on their personal belongings, contents, personal liability, and loss of use. The unit owner should ask to be named as landlord on the tenant’s policy.
This brief description does not contain, extend, modify or explain all the clauses, conditions, exclusions, or amounts of coverage under the policies. It only reflects basic coverage in force at the time of printing. Please refer to the individual policies on file with the Association for specific coverage.
Please do not hesitate to contact the office with any questions or concerns you may have. If you have received a request for a Certificate of Insurance for the Master Policy from your mortgage company you may submit a request online at https://www.jgsinsurance.com/certificate-request-form/.
Thank you,
Tammy Eaton
On-Site Community Association Manager
www.tidewaterproperty.com
Queen’s Landing CUO
500 Queen’s Landing Drive
Chester, MD 21619
[email protected]
O: 410-643-5192