There are plenty of half-truths around condominium insurance: they pass from mouth to mouth, they get aired at general meetings, and every so often expensive decisions grow out of them. I have collected the six most common misconceptions – and set beside them what is true instead. Not in order to convince anyone: but so that the building can decide from facts.
- The most common misconceptions are born from confusing the building's cover with the flat's, from misunderstanding the word “compulsory”, and from sums insured going out of date.
- There is a kernel of truth behind each one – which is why they are so persistent. The answer is not belief but knowing the policy and the policy terms.
- If a statement contains the words “always”, “never” or “certainly”, be suspicious when it comes to insurance.
1. “The building's insurance covers everything”
It does not: the building's policy covers the common property – the flats' contents and private property are a matter for the residents' own home insurance. Anyone who cancels their home insurance on the strength of this misconception is cancelling the protection of their own living room. The division of labour: who covers what.
2. “It's compulsory, like motor insurance”
It is not compulsory: no law requires it generally. It may be an expectation on the bank's part with a loan, and the building's organisational and operational rules (SZMSZ) may prescribe it – but that is a different genre from a statutory obligation. The full, nuanced picture: is condominium insurance compulsory.
3. “The common fund pays anyway, why bother with my own policy”
The “common fund” is not a bottomless purse: the building's insurance serves losses to the common parts, and the common charges are the residents' own contributions. If the building suffers an uninsured loss, in the end the same residents pay for it – as a special levy. On the real logic of community cover: why it is worth it for everyone.
4. “We took it out once, it's been fine ever since”
A policy is not a tin of preserves: as construction costs rise the sum insured can go out of date, and at claim time proportional settlement may come into play. Changes to the building – solar panels, refurbishment, new building systems – can equally drop out of the cover if nobody notifies them. The antidote is the renewal-date routine.
5. “The insurer always wriggles out of it anyway”
Insurers pay according to their policy terms – no more, no less. Disappointments are typically born not from “wriggling out” but from not knowing the terms: an exclusion, a limit, a deductible, underinsurance. That is why it pays to compare on substance before signing – the substance-based comparison helps with that – and to proceed in an orderly way when a loss occurs. And if a case really does stall, there is a way forward: help from the broker.
6. “That's the manager's job, it doesn't concern us”
Insurance protects the community's property out of the community's money – and the decision is typically the general meeting's, which means every owner's. A well-informed resident makes a better decision, and heads in the right direction at claim time too. That is exactly why all my materials are produced in “meeting-ready” form – and for a start, there are the 43 questions in the FAQ.
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