Inquiry About Condo Insurance and Wildfire Risks
Hello everyone,
I’m considering purchasing a condominium in the greater Los Angeles area and I’m looking for insights on how condo insurance works in the event of a wildfire, especially given the recent fires we’ve experienced in January.
The HOA has coverage for the exterior of the building, and I plan to get a “walls-in” policy for my unit. In the worst-case scenario where the unit is completely destroyed by a wildfire, I’m curious about how the insurance process works. Here are some specific questions I have:
1) Does the HOA’s insurance cover the cost of rebuilding the exterior shell while my condo policy takes care of rebuilding and replacing the interior?
2) If we decide to sell instead of rebuild after a total loss, what would the process look like?
– a) Can we reasonably expect to recover at least our down payment from the sale of the land? (We will have partial ownership of the land, despite the destruction of our physical unit.)
– b) Is it possible to file a claim for personal property and loss of use through our personal condo policy?
I appreciate any insights or experiences you might have! Thank you!
It’s great that you’re doing your homework on condo insurance, especially given the wildfire risks in the Los Angeles area. Here’s how it generally works regarding your specific questions:
1) HOA and Condo Policy Roles: Yes, typically, the HOA’s insurance policy would cover the rebuilding of the exterior structure (the “shell”) of the building. Your “walls-in” policy would cover repairs or replacement of the interior of your unit, including any upgrades, fixtures, and personal property inside. It’s important to review your HOA’s insurance policy to see exactly what it covers, as policies can vary.
2) Selling After a Total Loss:
2a) If your condo is a total loss, you would theoretically have a share of the land owned by the HOA that you can sell. However, whether you can recoup your down payment or the value of your ownership stake would depend on many factors, such as the market conditions at the time of sale and the overall demand for land in the area. Given that your specific unit would be gone, the situation could be complicated, and the return might not be guaranteed.
2b) Yes, you may be able to file for personal property coverage and loss of use through your personal condo policy. This could cover the cost of replacing personal belongings lost in the fire and possibly provide additional living expenses if you need to find temporary housing while your claim is being processed. It’s crucial to check the specifics of your personal policy and verify what kinds of losses are covered.
Don’t forget to discuss these questions with your insurance agent to get tailored advice, and it might be wise to consult with a real estate attorney to understand the potential complexities of your ownership stake and the implications of a total loss. Good luck with your condo purchase!