Photo Asset Archival » Comment on article by Kenneth J. St. Onge, June 3, 2008, “Court Turns Maryland Condo Insurance Upside Down”

Comment on article by Kenneth J. St. Onge, June 3, 2008, “Court Turns Maryland Condo Insurance Upside Down”

Filed under: Asset Education, Photo Asset Archival, Protecting by Lizz @ 12:58 pm on June 14, 2008

Do you own a condominium? If you answered yes, you need to know about and follow the outcome of an unexpected court decision by the Maryland Court of Appeals, (called the Supreme Court in other states) April 2008. The Court reversed 26 years of standard insurance industry practice when they ruled that The Gables Condo Council, in Rockville, MD and Bridgeport Condominiums in Laurel, MD were not required to pay for structural damage to individual units. Anderson v. The Gables, no.99, September Term 2007, Judge Bataglia (opinion). Prior to this ruling, the condominium association insurance policy was to pay for damage to the structure, returning it to its original state. In the past, the condominium unit owner’s insurance policy was intended to pay for upgrades to the original structure (i.e. new kitchen cabinets) and the owner’s personal property.
Impact of this ruling:
1. Most Maryland condominium owners are now underinsured.
2. Maryland condominium owners are overpaying for insurance in their association dues, for a policy which no longer benefits them individually.
3. There is the potential that other states will follow suit and base their rulings on the precedence set by this case law.
4. If the condominium owners cannot afford to have a unit repaired due to under-insurance, complexes likely will experience reduced property values when units remain empty, unrepaired, and/ or condemned. If the association bylaws contain a clause regarding failure to repair, owners could face legal action from the association.
5. This case law could lead to a much more serious problem, the perpetration of fraud; whereby unit owners wait to report an incident so that multiple units are affected.
My advice:
1. Obtain a copy of your condo association insurance policy.
2. Review the association policy and your individual policy with your insurance agent.
3. Make necessary adjustments and/or contingency arrangements.
4. This subject is addressed on pages 152-153 of my book, How to Create a Photo Asset Inventory and Protect Your Investments from Catastrophic LossTo read the article in entirety go to: http://www.insurancejournal.com/news/east/2008/06/03/90588.htm

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