ADJUSTERSINTERNATIONAL.COM 7 A renters policy usually contains a limit of insurance for “additional living expenses” needed to pay for substitute housing in the event a unit cannot be occupied due to a covered loss. Coverage under that limit applies only to the amount in excess of what the insured tenant usually pays for rent. The amount a tenant recovers under a renters policy will depend in part on whether the lease provides for an abatement, suspension or cancellation of rent payments when a unit cannot be occupied. For both the landlord and tenant, coverage for loss of use or rents is provided only in response to the type of damage insured under the respective policy. That damage does not necessarily have to be to the property insured under the policy and the coverage typically extends to orders by civil authorities closing off access to the property due to damage at nearby or related locations. But, as policyholders learned to their chagrin during the COVID-19 pandemic, coverage for loss of use or rents is not provided for disruptions caused by events not insured under a property policy. Condo and Co-Op Property Coverage Property insurance coverage for a condominium or co-op community works partly like that in a landlord-tenant arrangement in that a community association insures the basic building structure under a commercial property policy, while residents insure personal property in the individual dwelling units with a unit-owners policy. Where insurance for condos and co-ops departs from that for landlord-tenant situations is in coverage for permanent fixtures within dwelling units, such as cabinets, wallpaper, wall-to-wall carpeting and lighting fixtures, in addition to plumbing, wiring and radiators that extend into a unit. As indicated above, the assignment of ownership for such property and the responsibility to insure it are established in master condominium or co-op agreements, which are not standardized and can vary greatly in their specific provisions. Standard insurance policies are designed to avoid a “gap” in coverage for building property within dwelling units, but they, too, are sometimes modified in ways that can create confusion following a loss.
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