Maryland Condominium Act and your Master Policy Deductible- Change effective 10-1-20

How does a condominium board decide to increase to the $10,000 deductible?

 You have the option to change your deductible effective 10-1-20.  With the new legislation, if a loss originates in a unit, that unit owner, is responsible for the first 10,000 of the master deductible. 

Without any changes, the unit owner would only have to be responsible for the first $5,000, UNLESS YOU ENDORSE THE POLICY TO INCREASE THE DEDUCTIBLE TO $10,000.  This would avoid smaller claims affecting the ultimate cost of the master policy insurance.

Here are some items you need to consider: 

  1. Determine the amount of refund the association would receive, and select a date to make the change (by endorsement as of 10-1-20 or at your renewal date)
  2. Send notification to all unit owners that the master policy deductible will increase from $5,000 to $10,000 effective that date.  This will allow the unit owner to adjust the coverage under their HO-6 policy to pay for this additional amount. Please be sure to document how the notification was given to the unit owner.  We estimate the unit owners cost to be about $25 additional premium. You want to make sure that the unit owner has the funds available from the homeowners insurance to pay the $10,000 deductible.
  3. Our agency would be happy to assist any unit owner and quote on their insurance to cover this change.
  4. Note: if you make this change and a loss occurs within the common elements or limited common elements, then the association would be responsible for the $10,000 deductible.  You may want to review the budget to make sure there are funds available if the association has to pay the $10,000 deductible.
  5. You would have to decide between the reduction in premium and filing claims under the master policy. One of the reasons this legislation was passed was to assist those association who have multiple losses to be able to collect the $10,000 from the unit owner.  

 I would be happy to discuss this and answer any questions you may have.