Under the Declaration, the Pilot Point Council of Owners is required to secure fire and liability
insurance for the buildings and common area. In the early days of Pilot Point, the Council obtained
the required insurance at an annual premium cost of $8,000 to $10,000. After our major fire on
December 25, 1983 this cost increased dramatically to as high as $65,000 for a year.
Over the past few years, the cost for our total insurance, including flood, has averaged around its
current level of approximately $75,000. The Council and our Insurance Agent, Williams Agency,
annually review the amount of coverage we have on each building to cover the reconstruction cost
if a fire should ever occur. Building coverage for flood insurance is at the maximum of $250,000 per
Between 1973 and 1983, Pilot Point insurance had a deductible of $250 for each occurrence. After
many claims by unit owners, due to freeze-ups during the winter, our Insurance Agent strongly
recommended that Council increase the deductible amount to $10,000 for each occurrence. Your
Council will pay this deductible on each occurrence, with the exception of water damage, that has
been truly verified unless there is evidence of gross negligence, based on written submission from
the unit owner affected and inspection of the unit affected. The deductible amount will then be the
responsibility of the owner of the unit where the cause of damage originated. For this reason, each
owner should carry an "HO-6" policy with the proper coverage on their personal HO-6 policy. The
HO-6 policy should pay the unit owner's responsibility of the Deductible on the Master Policy. This
can be done under Coverage A - Building Coverage or Loss Assessment Endorsement. In any
event it is the responsibility of the unit owner to make sure they have adequate coverage and limits
to cover their responsibility for the Master Policy deductible.
INSURANCE INFORMATION FOR OWNERS OF
Pilot Point Condominium
Condominium Insurance Coverage
Pilot Point carries a number of insurance policies as required by the Condominium's basic
documents. Included among these policies are the Property, General Liability, Directors and
Officers Liability, Employee Dishonesty/Crime, Equipment Breakdown and Flood Insurance.
The Property section of the Master Policy covers all real property belonging to the Association
(buildings including common elements and units, fences, up to $10,000, etc). Coverage is written
on a Replacement Cost Basis, which means that the policy will replace with like kind and quality and
without depreciation all covered losses up to the blanket limit of the policy. All covered property
losses are subject to a $10,000 deductible except Wind and Hail losses which are subject to a
deductible of 1% of the total Building limit. The Property section also covers the interior of each unit
as they were originally deeded by the developer, but not including improvements and betterments
made by any owner. In other words, whatever was originally conveyed to a unit – floor coverings,
cabinets, counters, appliances, and fixtures – is covered by the Master Policy. Whatever owners
(previous, current or subsequent) add or alter are the owners’ responsibility to insure. The Master
Policy will not cover additions, alterations, betterments or improvements.
The Property section of the Master Policy is written on an "all risk of direct physical loss”, only
exclusions are listed. These would include Fire, Lightning,Smoke, Vandalism, Weight of Ice/Snow,
Glass Breakage, Water Damage, Wind/Hurricane and Named Storm. Common exclusions are wear
and tear, water seepage, and maintenance issues. For a complete list of exclusions, please refer to
the Master Policy.
The General Liability Policy provides liability coverage for bodily injury and/or property damage
when the Association is negligent. Coverage extends to all areas of the Association except to the
interior of the individual units. Unit owners should secure their own coverage to protect themselves
from liability claims within their own units. The property manager is an additional insured under this
Crime/Employee Dishonesty coverage protects the Association’s funds from theft by the Board, any
employees or volunteers that the Association may hire, and the property management firm.
Directors and Officers coverage protects the Board of Directors from covered claims involving
“Wrongful Acts” (liability protection for individuals on the board who are sued in their capacity as
board members). The policy also includes the property manager as an additional insured.
Owners or Renters Insurance Coverage
Individual residents (whether owners or renters) should have their own unit owner or tenant policy
to coordinate with the Master Policy and to protect their own property and liability. The amount of
insurance on a resident's personal property should be adequate to replace the contents of the unit.
Thus, the policy should be written on a full-replacement basis so that in the event of a loss, the item
(s) would be replaced at current values rather than the original cost less depreciation.
We strongly suggest taking inventory of what you have in your unit and going through the
painstaking process of itemizing everything room by room. Determine the cost to replace your
belongings and provide your insurance agent with the total value. In subsequent years an inflation
guard is built into the policy.
Personal liability limits start at $300,000, but may be increased. If you rent your unit, $500,000 is
the recommended amount. Liability protection covers bodily injuries or property damage sustained
inside the unit by third party persons other than the unit owner.
Important features of the standard unit owner policy are the provisions for (1) Additions and
Alterations; (2) Loss Assessment; and (3) Additional Living Expense. Additions and Alterations and
Loss Assessment are usually included in the basic policy at a limit of $1,000. This limit can be
increased for a small additional premium. The limit for Additional Living Expense is 20 percent of the
limit for personal property. Thus, if personal property is insured for a limit of $30,000, the Additional
Living Expense limit would be $6,000. The Additions and Alterations (also called Betterments and
Improvements) provision covers the value of any improvements a unit owner makes within the unit.
These improvements could include such items as wallpaper, built-ins, and upgraded appliances
and/or carpeting/tile/flooring upgrades.
Loss Assessment coverage is for instances when the condominium association suffers a large
property loss or liability judgment and the association's policies do not entirely cover the loss. In
such a situation, owners may be assessed a percentage of the repair bill. Loss Assessment
coverage would pay the individual owner's assessment up to the limit of the policy. Five Thousand
Dollars of this coverage is the minimum amount suggested.
Additional Living Expense coverage reimburses the unit owner for expenses incurred while living
outside of a damaged unit during repair. Hotel costs, meals, and other forms of additional expenses
are covered by this policy feature. The Master Policy WILL NOT pay for a displaced owner/renter
to live elsewhere during a unit’s repair. It also is possible for a unit owner to make recovery for
losses not covered by the Master Policy under the HO-6/unit owner policy. The unit owner can
secure, under the HO-6, coverage for claims that impact the building as well as personal property.
Thus, losses not covered by the Master contract can be recovered under the unit owner building
form. An HO-6 policy generally includes a $500 deductible.
All owners should understand that if they are displaced for any period of time in the event of a loss
(catastrophic or otherwise), that you are required to continue to pay your mortgage AND your
condominium fee. Master Policy and/or homeowners insurance will not make these payments for
At the time of a claim, the insurance adjuster will ask you for a copy of the bylaws, master policy
and the unit owners HO-6 policy to determine which policy pays out to what amounts subject to a
coverer cause of the physical loss.
Should you have any questions about the Association's coverage, or about your own coverage in
relation to the Association’s policies, you may call Melissa Kelley at the Williams Insurance Agency
at 302-227-250 extension 221.
If you are interested in acquiring an HO-6 policy or would like to see alternative quotes, call Travers
Downes at the Williams Insurance Agency at 302-227-2501 extension 259..