Coverage on Townhome- Need Clarification

[NCAgent]

I have a question to straighten out townhomes since they seem to be getting more common for me to write.

Townhomes can be covered as a condo or as a dwelling, depending on what you are responsible for insuring as the occupant, correct?

Example, some townhomes have HOAs that have master policies, whereas some other ones don't. Therefore, you would change up the policy depending on the way the townhome is covered.

So my question is this: Is there ever a time where a townhome has a master policy but requires an HO3 rather than HO-6? I've been running into people with master policies but their mortgage company requires an HO3 anyway. I don't get to see the master policies to check myself.

A master policy covers the outside of the dwelling everytime right? Is there an election on a master policy where the client is responsible for the outside dwelling and the MP covers something else instead like liability? It just seems like I'm missing something obvious here or the mortgage underwriters are asking for dumb stuff.

I might sound dumb but I keep having mortgage officers tell me different things here depending on the bank and it's starting to piss me off. I'd like to know when I need to back off from writing a client if it's not in their best interest...

 

[iiinycboi]

I'm not too experience, but i think you can show the mortgage underwriters the master policy showing it covers the dwelling. Then you can ahead and give the inside coverage only? not sure if its ho-6.

the banks only want their money insured in case the building burns to the ground, so i think you can just show them proof of coverage?

 

[Guest]

The HOA governing documents (CC&R's or Bylaws) should describe the insurance requirements.

When I'm offering insurance to the prospective townhome buyer I ask to see the HOA governing documents to make sure who is responsible for insuring the townhome building. If the HOA is required to maintain property insurance for the townhome building(s) a HO-3 would not be appropriate.

When I'm the agent for the HOA I have been asked to explain the current HOA insurance to the loan officer, manager or senior executive.

Some lenders want to dictate the insurance. In those instances where the lender refused to accept what is considered correct and appropriate insurance either the real estate transaction did not go through or it went through with another lender.

 

[Scottyj]

I ecourage my clients who experiance changes in their HOA to keep at least 10-20k worht of structural coverage being these Master Policies tend to have very high deductables, in many cases some carriers will use the amount carried on coverage A to help the applicant pay the deductable assesed by the HOA.

 

[Hefe]

Loss assessment covers the master policy's deductible. Coverage a would be used for interior building items.

As for having both a master policy and an Ho3, its possible that the HOA decided to carry insurance on just the common areas (clubhouse, playground, etc) which would then make an Ho3 necessary. I have seen one community that was set up this way after they voted down a master policy to cover the buildings.

 

[Guest]

Not sure why people are commenting,.....basically, you cant do squat until you read the CC&R's, otherwise, your just guessing........

Let me ask you, once you get the CC&R's, read and understoof, and write this policy, what do you then do?