Policy terms are not a novel: nobody expects you to read them from beginning to end with pleasure. But they are not a black box either – five good questions will get the substance out of them, without a law degree. This crash course gives you a map of what to look for where in a set of condominium policy terms, and what to watch for on the building's behalf.
- Five key places: the cover list, the exclusions, the sums insured and limits, the deductibles, and the claim reporting rules.
- Take nothing for granted from a heading: the same cover name can mean different things at different insurers – the substance is what counts.
- You do not have to chew through it alone: in a comparison this work is the broker's job – the table is a distillation of the policy terms.
1. The cover list: what does it apply to at all?
First question: exactly which perils are included in the cover – fire, storm, water damage from pipes, glass breakage, liability, and so on. Here you have to look behind the names: “storm damage”, for example, applies from a different wind speed and to different losses depending on the insurer. For help with the cover map: what it covers and what it doesn't.
2. The exclusions: when does it not pay?
Every set of policy terms names the situations that are not covered. In a condominium the most frequent sore point is a lack of maintenance: with losses starting from a neglected roof or an aged riser, the insurer may point to the maintenance that was not done. That makes the exclusion list not just legal text but a to-do list for the building: it shows what has to be kept in order. Related article: loss prevention in the building.
3. Sums and limits: up to what point does it pay?
The sum insured is the upper limit of the cover – and it has to track the building's real rebuild value, otherwise underinsurance arises. Individual covers may also have their own limits: glass breakage, vandalism or liability losses often have a separate ceiling. Whether a quote is “cheap” is often decided right here: lower limits make a lower premium easy to offer.
4. Deductibles: how much stays with the building?
The deductible is the first part of a loss, borne by the building – it can be a fixed amount, a percentage or a combination of the two, and it can differ from cover to cover. Choosing the deductible is a strategic question: the detail is set out in the article on deductible logic. In the policy terms, look for this: how much applies to which cover, and whether different rules apply to certain types of loss.
5. Claims rules: what does the insurer expect?
Finally, look at what the insurer asks for when a loss occurs: a reporting deadline, documentation, a duty of loss mitigation. Smooth claims handling can depend on meeting these – the practical sequence is described in the article on reporting a claim. And a piece of good news to close with: in a comparison, the property manager does not have to read through these five areas alone – my quote table is built from exactly these points, quote by quote, side by side. And for the questions, there is the 5 questions list.
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