If you own a property that is within a condominium regime, your investment through the proindiviso, that is, your owner title, covers a percentage of all buildings, outdoor constructions, gardens, pools, perimeter fences, retaining walls, elevators, machinery, pieces of art, gym, offices, and all those facilities and their contents in the common areas.
We have found that the administration of the association, the building, the subdivision, does not know the updated value of all these assets. If an accident occurs, the insurance company must know how much it will cost them to rebuild or replace the damaged areas to return it to the condition it was in before the loss occurred. That is why it is very important as a condominium owner you require the administrator to have this information up to date.
1.- Reconstruction values of the building and common areas
One thing is the commercial value, what it costs to buy a condominium, or a building, and another is the construction costs. The first is marked by the real estate market, the second by the costs of materials and labor, engineers and architects. The latter is one the administrator must have updated, because in case of damage, he will hire a company to rebuild it. There must be a sufficient coverage limit in the Mexican HOA insurance policy. There are several ways to calculate the reconstruction value. The most accurate is using a construction appraisal. To simplify the process, we recommend that it be done on a single area and from there multiplied by the total square meters of all constructions with similar characteristics.
2.- Replacement values of the contents of the common areas
You also own a portion of all the movable property and machinery in the lobby, terrazas, gardens, machine rooms, gyms, etc. The administrator must have an inventory of all this, including the acquisition year and the replacement year as new. While the developer has kept all the original invoices (facturas), he must provide a quote of what the new equipment costs are. All this is part of the fixed assets of your property and you must know them. The companies that maintain the machinery and elevators can normally provide this information without problem. Also, costs you find searching the internet can be a good guide. It is also very important that you identify the key machinery for daily operation and have a contingency plan for its replacement.
Photos and videos of all the contents of the common areas is of utmost importance to be included with the inventory list.
3.- Third-party provider services in common areas
In some buildings and subdivisions there are services of bar, restaurant, and spas. The administrator must have a contract with each of them where the condominium association is relieved of responsibility for its activities, in addition to having to present an liability insurance policy for damages to its operations and products as part of the contract.
4.- By Laws or CCR´s
There are more and more condominium buildings dedicated to vacation rentals. It is important to talk to the administrator and check how many days of rent this regulation allows.
On the other hand, in case the building has to be evacuated by orders of the authority, as in the case of a fire, it must be established in the Bylaws or CCR´s if the administration is not responsible for the relocation of the people in the condominiums, and if so, that it has the money or Extra Expenses coverage in the HOA Master Mexican insurance policy.
5.- Master regime and shared areas
If your property is within a condominium regime that is also within a master regime, it is important that you talk to your administrator about the service contracts you have between these regimes, such as access booths, roads, gardening, water intakes, garbage collection, shared machinery, and equipment.
If they have shared construction and machinery and equipment, these contracts must establish liability in case of destruction or damage and how they will be covered in the insurance policies.
6.- Master HOA Mexican Insurance Policy
As a homeowner you have the right to review the HOA Master Mexican insurance policy of the entire condominium complex. It is important that you discuss with the administrator the insured sums for the buildings and contents in the common areas, when was the last time they were updated, if it was indexed with the inflation of its currency (it can be in dollars or pesos) each year, the catastrophic coverages such as hydrometeorological phenomena, if it is included or not and why. Is there a condominium contingency fund for these cases and to cover the deductibles and coinsurance of this policy? The earthquake, machinery breakdown, limit for glass breakage that covers all windows and glass doors of the terraces of all condominiums, as well as the limit of Civil Liability coverage for damages to third parties, with a minimum limit of 1 million US dollars or 20 million MXN pesos.
Contact us, and we will gladly make a study of what your condominium association needs, and we will give you a proposal with the recommendations for its implementation.
For more information you can visit us on our page
Condo insurance
México - 322-297-6440
México - 800 627 46 37
USA / CANADA - 949-274-4111
