Q&A: Considering a condo?

Here’s what you need to know to help insure it properly

The condo market is booming. Many buildings in major cities offer enough amenities for residents that they might not even have to leave­—grocery markets and commercial space on the ground floor, pools and gardens on the roof and fitness centers in between. Within the units themselves, many buildings are furnishing condos with luxury upgrades which include top-of-the-line appliances, premium tiling, marble countertops and more.

With all this activity, it’s a great time to take the leap if you’re considering buying a condo. But whether you’re a condo convert or have a condo you’ve owned for decades, it’s important to understand how to manage your financial risk in shared spaces.

Condos, particularly luxury units, have many nuances when it comes to insurance. We interviewed Mary Gould and Nancy Ayers of Alliant/Mesirow Insurance Services, to learn more. Nancy manages the Residential Risk Management Practice as Senior Vice President, specializing in commercial condo coverage, while Mary serves individuals and families, managing Alliant’s Private Client team as Senior Vice President. Together, the two make a perfect pair. From flooring to flying umbrellas on rooftops (yes, really!), they have a wealth of experience to help answer the condo questions that clients often ask.


Q: What condo trends are you seeing in the market today?


Alliant/Mesirow: Condo buildings are focusing on experiences for residents, which, in many cases, means more amenities. In Chicago, we’re seeing new buildings, many with rooftop fire pits, gardens, pools and patios. In places like Denver, buildings today can cater to residents’ dogs just as much as their owners. Condos are stepping up their game, increasing the appeal of living in a shared building as space becomes harder to find in more populated areas.


Q: If I live in a condo, what needs to be on my radar?


Alliant/Mesirow: Condos are a wonderful option for many individuals, couples and families. However, it’s easy to overlook the responsibilities that come with condo ownership.

While your unit is your own, it’s important to remember that you are living in a space where you probably share more than one wall with others. As careful as you may be with your condo, you can’t assume others will take the same care. This close-quarter living increases your risk, and it’s important to make sure you are managing it appropriately.

For instance, when it comes to newer units in big cities, shared spaces have moved up. It’s important to understand the risks to using shared spaces—for example rooftop protocols are not always well-defined. We heard a story recently where on a windy Chicago day, a rooftop umbrella broke loose from its casing and flew to the other side of the deck!


Q: I’m considering buying a condo. How do I choose wisely?


Alliant/Mesirow: A condo is a lifestyle, so find one that is right for you. You’ll be immersed in the community that makes up the building, so find a building that reflects the type of life you want to live. The people should feel like neighbors you’d want to live with!

Knowing the financial health of a building is also very important when making a decision to live there. When you purchase a condo, you are buying into a business. You need to make sure that the building is maintained, and has adequate reserves. If a condo building doesn’t offer up their financials, ask.

When you’re shopping for a home, it’s wise to consider the work you’ll need to put into the property as part of the total cost. It’s important to do the same for a condo. Consider improvements you’ll need to make, and the cost of the association assessment payment, in your final decision.


Q: What do I need to consider to properly insure my condo?


Alliant/Mesirow: Just as you make sure your living space is the right fit for your lifestyle, it’s important to make sure that your insurance is the right fit as well. If you have a luxury condo, there are important coverages that are not always included in a standard unit owners’ policy. Condo owners should consider the following coverages:

  • Additions and alterations: If you renovate your condo, your coverage should reflect the value of these improvements and betterments. This coverage can help, for example, if a covered loss damages your condo’s new hardwood floors. (Check your declarations, your Master Deed and the condominium act in your state to determine what you are responsible for. Some improvements, such as flooring, may be the responsibility of the unit owner.)
  • Extended replacement cost: This coverage basis can be very important, especially for luxury units. For instance, if you have a covered loss to materials in your condo that are difficult to replace (like imported marble on the countertops in your new open-concept kitchen), it can help cover the amount to replace them if the cost to import brand-new countertops is higher than your coverage limit.
  • Back-up of sewers and drains: Shared buildings can be prone to sewer issues and backups, so it’s important to seek coverage for this type of risk. Even if another condo owner is responsible for damage to your unit, you cannot assume they will cover the cost (and, depending on what the damage is, the amount could be substantial).
  • Loss assessment coverage: This helps cover your share of costs charged by your condo association of property owners, and luxury unit owners often need higher limits.
  • Valuable articles coverage: It’s important to look at the limitations to coverage for valuable items in your condo policy. For much higher-value items or collections, a separate collections policy is needed.
  • Cyber coverage: Cybersecurity is on many people’s minds today, and good family cyber coverage is quickly becoming a must-have.

We visit unit owners and talk about all these things, down to the building ordinances and needs of their individual unit as well as their responsibility if they damage another unit. We also offer our clients complimentary appraisals, which can help them identify what items they should insure, and how much coverage they need.


Q: I’m a building owner. What is one of the biggest things I should be thinking of?


Alliant/Mesirow: One of the biggest risks for building owners is water damage. Water can and will travel from one floor to the next and can cause major problems along the way. At Alliant/Mesirow Insurance Services, we’re continually stressing the importance of prevention to our clients, and we know many steps to help manage and reduce the likelihood of having a water loss.


Q: What’s the benefit of working with an agent like Alliant/Mesirow Insurance Services?


Alliant/Mesirow: We work to create customized programs that specifically fit building owners’ and condo owners’ needs.  Our team stays up to date on products, laws and helps eliminate the guesswork in the world of condos and beyond. For many of our condo-owning clients, we can provide insight and expertise on the property because Mary’s team has likely offered insurance to other clients in the building. And since Nancy’s team works with building owners, they often have insights they can share that could help condo owners as well.

We’ve been working in this environment for such a long time. We deal with condo losses daily, and we understand how they affect both the building and its residents. We work together frequently, and build off our knowledge together to best serve clients, and point out what they need.

Collaborating in this way helps us stand out as specialists. When you love what you do, you always want to keep building that knowledge base.

Nancy Ayers is Senior Vice President at Alliant/Mesirow Insurance Services.

Mary Gould is Senior Vice President at Alliant/Mesirow Insurance Services.

For more information on condo coverage from Berkley One, a Berkley Company, visit here.