Our claims department continues to struggle with coverage provided by the CP 00 17 10 00 for (specifically) carpeting, and also wallpaper and paint inside a condominium unit. We are currently of the opinion that if the condo documents (master deed and bylaws) require the association to insure, for example, all units, common elements and limited common elements, the CP 00 17 would pick up coverage for carpet, wallpaper and paint.

We frequently encounter losses where the damage is confined to a single unit and it is necessary to replace vinyl or carpet and padding because of the buckling of the sub flooring. Confusion (not to mention frustration) occurs in trying to determine where the coverage comes from.

The HO-6 policy contains a statement making it excess over the association policy, and the CP 00 17 is specific that it is primary and not contributing. Is it the intent of the CP 00 17 to include carpet, etc., if the association is charged with insuring it? And, in the second paragraph of the HO-6 "other insurance" clause, the word "recoverable" could indicate that if the master policy has a deductible which prevents recovery from its policy, the HO-6 will drop down and become primary to that policy.

What are your thoughts about these two matters?

South Carolina Subscriber

At one time condo unit owners were considered to have purchased "air space" and everything from bare walls out was considered the owner's responsibility to insure. Now the condo association master policy may cover individual unit owners' "fixtures, improvements, and alterations that are part of the building structure" so long as the association agreement requires it. Improvements and alterations that are part of the building include (but are not limited to) paint, wallpaper, lighting fixtures, counters, etc. There is also coverage for appliances such as dishwashers.

Coverage for carpeting follows the same logic. If wall-to-wall carpeting is included in the mortgage it is part of the realty and thus falls under the "improvements and alterations" that are part of the building structure. If not so designated, then generally where carpet is laid over an unfinished floor it is considered part of the building and would be covered as such. If the carpet is laid over a finished floor, and its removal would not materially damage the floor, courts have generally held it to be contents. Coverage would therefore be found under the HO-6.

You are correct in your interpretation of the deductible application. If the association has insurance covering the same property as the HO-6, the unit owner's insurance "will be excess over the amount recoverable under any other insurance." So, if nothing is recoverable because the association's deductible is greater than the amount of the loss, the unit owner's coverage becomes primary. The purpose is to prevent double payment for a loss, not to prevent payment for a claim.

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