CHICAGO -- All is quiet on the home front until your dishwasher goes on the blink while you're away. An all-day rinse cycle spills onto your floor and into the common areas of your condominium building.
Evidence that something is wrong meets you at the door as you insert the key. Your feet sink into a soggy hallway carpet, and hysterical cries drift up from your downstairs neighbors -- vows of revenge for the interior rain shower.
As for your condominium unit, let's face it: You've got a mess on your hands. Kitchen tiles have buckled into the shape of noodles. Water is ankle-deep.
What could be worse? Your insurance could be inadequate.
There are two kinds of insurance for condominiums: the association's master policy, which insures the building in case of fire or other damage or liability, and the policy carried by the unit owner, which covers the home's interior and its contents. The latter is like a homeowner's policy, with some important differences.
"With a condo, you are insuring space -- the interior space -- more so than a building," said Bob Lapinski, a spokesman for Allstate Insurance Co. in the Chicago suburb of Northbrook, Ill. "A home has more physical space, inside and outside, to be insured by the owner."
For individual condo owners, the question is which portion of the condo is yours and what will be covered by the condominium association insurance plan, Mr. Lapinski said. What is covered under your condo association's insurance is also important.
"Every condo buyer has the right to see the certificate of insurance and the policy of the [condo] association," said Jean Nelson, account executive at Near North Insurance Brokerage Co. "The mortgage companies the [condo] buyers deal with look into this when the buyers are making the purchase. The mortgage companies want to know how much insurance the buildings are carrying before they agree to the loan."
Ms. Nelson said condominium owners can determine what they are responsible for by turning to their association's declaration. A condominium's declaration defines the unit you own and outlines your responsibilities as an owner. It also tells you what the building's insurance plan covers.
The condominium owner and the insurance agent can determine how much homeowner's insurance is needed and meld that coverage with the coverage provided by the condominium association.
For example, individual condominium owners of one of the buildings that Near North insures must insure their personal property, such as household contents, storage locker contents, non-built-in appliances (refrigerators and stoves), patio doors, and heat and air conditioning units, compressors and hot water heaters. Individual unit owners are also responsible for insuring alterations or additions made to the units, including decorating (wallpaper, paneling, mirrors, window treatments or paint finishes), floor coverings, upgraded cabinets and counter tops, upgraded plumbing and electrical fixtures and upgraded built-in appliances.
Condominium owners should also make sure that personal liability is part of their insurance plan, with provisions for any domestic help under workers' compensation.
The cost of condo insurance is determined by the value of what the owner has to be insured. Coverage can range from $50,000 to millions, depending on the value of the condominium and personal property (clothing, jewelry and furnishings).
"In some cases, condo insurance may be more than renter's and less than a regular homeowner policy," said Robin Davis, underwriter at Exchange Insurance Planners Inc. "But it depends on what you have to be insured."
Ms. Nelson said there is no recommended amount of condominium insurance. "Mr. Average could have $50,000 to $75,000, while someone who has many furs and jewels could be well into the millions for personal belongings alone."
Insurance brokers say it is not necessary for individual condo owners to be insured with the same insurance company that covers the condominium building.
"Some condo owners want to be insured with the same company that insures the building, but it's not mandatory," said Mr. Lapinski.
William DeMille, executive vice president of J. S. James Management Co., which manages condominium buildings in and around Chicago, says it's typical for a condo declaration to state that the building's policies will insure the perimeter and partition walls and ceilings, through the plaster and primer only; doors through the primer only; floors through the concrete only; original tile in the bathrooms; original cabinets and counter tops; original built-in appliances (permanently attached/cannot operate freestanding, such as stoves, dishwashers and disposals); and original plumbing and electrical fixtures.
But it's important to scrutinize the subjects covered in your condominium declaration.
"Condo owners should pay close attention to the word 'original' in those [condo] declarations," Mr. DeMille said. "Some declarations make it clear that the original work is the only work that is covered by the building's insurance. If any remodeling or upgrading is done, the responsibility to insure that work then belongs to the individual owner."
In the case of the condominium owner's dishwasher that ran amok, the owner would be covered under the building's insurance -- if the dishwasher was the original one installed when the building was constructed or when it was converted into condominiums.
But if it is not the original dishwasher, the condo owner may be responsible for damages he or she failed to have covered in the individual condo insurance.
Ms. Nelson said that if a leaky pipe causes a flood, it depends on what caused it to leak. Wear and tear, Ms. Nelson said, is not covered by insurance. But if there was a sudden or accidental break in the pipe and the pipe is a common element, then the association is responsible for it.
"Much depends on the individual buildings and what they have stated in their declarations," Mr. DeMille said. "Some buildings' insurances may cover original appliances in their declarations, but some declarations may have no mention of this. It's important to review your building's declarations and then sit down with your insurance agent to get the best coverage to meet your needs."
In a booklet on condominium insurance, the Community Associations Institute, a non-profit organization that offers information to condominiums, town houses, cooperative associations and other planned living developments, said most condo associations' policies insure all the buildings and common elements in one policy. These insurance policies are done under either the "bare walls" or "single entity" approach.
In the "bare walls" approach, the association policy insures the basic building (walls, roof, floors, elevators) but leaves it to the individual owner to insure such items as appliances, carpeting, cabinets and wall coverings in the unit.
In the "single entity" approach, the association policy insures more than the building. It also insures items within the owner's unit, like appliances, cabinets, carpeting and wall coverings. But individual condominium declarations often specify that these items must be original to the building to qualify for coverage.
Barbara Beach, a spokeswoman for the institute, says some declarations of condominiums are as individual as the buildings themselves.
The institute's guidebook on condo insurance says that because absentee ownership is often part of condo ownership, this area should be explored when looking into insurance coverage.
For example, if you own a condominium and rent it out, insurance arrangements can be made to fit the owner's needs. In this case, the personal property limits would be dropped to a lower level to cover those items remaining in the unit that you own. It would then be up to the renter to get renter's insurance to cover his or her personal belongings.
It's also possible to make sure your policy covers loss of rents or fair rental value.
Fires and floods are two topics most often on the minds of condominium owners; both these areas are covered in the declaration of individual condominiums.
"Most declarations state that the insurance the building has is responsible for replacing a [condo] unit to its original condition after a fire," said Palma Paolillo, director of residential facility management at Venterra Sales and Management Co. in Chicago, which manages condominium and town house associations. "But this does not include any improvements that the owner may have made. If improvements were made by the owner, then they should be covered under the owner's policy."
Ms. Davis, of Exchange Insurance Planners, said it's important for condo owners to bear some of the "information" burden because not all insurance agents are familiar with what should be covered in condominium insurance in a particular building.
"There are similarities between condo insurance, homeowner's insurance and renter's," said Ms. Davis, who said about 15 percent of her business comes from condo owners. "The condo insurance is like homeowner's and renter's rolled into one. The space, no matter the size, has to be insured and the belongings inside protected."
For more information on condominium insurance guidelines, write to the Community Associations Institute, 1630 Duke St., Alexandria, Va., 22314 or call 703-548-8600. Booklets on this subject are available from the institute for $1.50.