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A Guide to Insurance and Preventing Water Damage

AVOID DISASTERS: FOLLOW THESE SIMPLE STEPS

October 2012

PLEASE READ THE FOLLOWING IMPORTANT INFORMATION CAREFULLY.

FAILURE TO TAKE THE PREVENTATIVE MEASURES DESCRIBED HEREIN COULD RESULT IN COSTLY DAMAGE TO YOUR CONDOMINIUM.

WHAT YOU NEED TO KNOW

SECTION A: Precautions to take to prevent water damage whether or not you are closing your unit for the winter.

SECTION B: How to winterize your unit ¡f you will be away for an extended period of time.

SECTION C: What you should know if you have a tenant.

SECTION D: Insurance coverage. (2024-2025)

SECTION A

  1. WATER HEATERS Unit Owners are required to replace water heaters in their Units which are more than 10 years beyond their date of manufacture.
  2. WASHING MACHINE HOSES should be replaced with stainless steel hoses if you have not already done so. Additionally, you should have a water shut off valve at your washer and it should be shut off at all times when your washer is not in use.
  3. Thermostats should be set at 55oF or higher at all times.
  4. If you will be away for more than 24 hours, turn off the main water supply. Turn off the hot water circuit breaker to prevent burning out the element, but DO NOT turn off other circuits. Main circuit breakers and breakers on smoke detector and heating circuits must be left on at all times.

WHILE THESE STEPS PROVIDE NO GUARANTEE AGAINST FREEZE-UPS OR OTHER PLUMBING FAILURES, THEY WILL GREATLY REDUCE ENSUING DAMAGE SHOULD SUCH FAILURE OCCUR.

SECTION B

If you are closing your unit for the winter the ONLY WAY TO GUARANTEE that you will not have frozen pipes is to have your unit winterized by a LICENSED, INSURED PLUMBER. This involves applying compressed air to the main water line located outside your unit to remove all water from the line, pouring non-toxic anti-freeze into sink and tub drains and toilets, and special attention to appliances such as washer, dishwasher and icemaker. NOTHING LESS THAN THE ABOVE PROCEDURE WILL PROTECT YOUR UNIT FROM BROKEN PIPES.

SECTION C

  1. Be sure your tenant is fully informed regarding items 3 & 4 in Section A and regarding winterizing instructions if they will be away for an extended period during the winter months.
  2. Notify your electric supplier that, if your tenant terminates their electrical service, it is to be continued without interruption in YOUR NAME, but under NO circumstances are they to terminate service completely.

SECTION D - Unit Owners' Insurance Guidelines (2025-2026)

An adequate insurance coverage plan for Sea Pines Unit Owners consists of:

  1. the Master Policy coverage maintained on your behalf by the Sea Pines Home Owners Association (HOA) and
  2. a personal insurance policy obtained by individual Unit Owners through their own insurance agent.

Master Policies

As mandated by the Sea Pines By-Laws, various master insurance policies are maintained by Sea Pines on behalf of all Unit Owners. Paid for through the monthly maintenance fees, the master policies include property damage, general liability, directors and officers, and umbrella/excess liability coverage. This insurance protects not only the individual Unit Owners but also the entire community.

Property damage coverage is for losses resulting from fire, lightning, windstorm, hail, overflow from plumbing or appliances, frozen pipes, and certain other causes. Both the Unit interior and exterior are covered.

The Sea Pines by-laws require that the property damage insurance coverage be for 100% of the replacement costs of the entire Sea Pines property, if such coverage is obtainable. This comes into play only in the very unlikely event that the entire property covered by the policy is affected. The current (2023) estimated replacement cost was calculated to be approximately $90 million. For 2025-2026, property damage coverage remained at the previous level of $71 million. This continues to be the maximum amount obtainable for a property of our size on Cape Cod. To achieve this, the property damage insurance was obtained with two separate policies: one for Sea Pines Phases I, II, IV, and one for Sea Pines Phase III. The policies are in all material respects identical.

Limitations of Master Policy Coverage

The insurance coverage included in the master policy has certain limitations which are the responsibility of individual Unit Owners.

Improvements. First, the amount of coverage is set at a level which would restore any damage to the Unit interior to the level of finish (including kitchen appliances and bathroom fixtures) as originally constructed.This means that if a Unit Owner has made significant improvements or upgrades to the interior of the unit, the master policy will not cover their full replacement costs. Flooring, carpeting, drapes, wallcoverings, light fixtures, furniture, and furnishings or other private property are not covered. The master policy does not include loss of use or temporary housing coverage.

Deductibles. The master policy for property damage includes deductibles, i.e. amounts for which the individual Unit Owner is responsible before the master policy coverage begins. The deductible for most claims is $50,000 for each occurrence. This deductible significantly reduces the total master policy premium and increases the threshold for claims against the policy. There is also a specific deductible which would be applied to all Unit Owners for losses resulting from wind or hail damage based on the assessed value of the affected building(s). While the two policies vary on how this deductible is calculated the average deductible per unit would be approximately $10,000.

Individual Unit Owner Insurance

The Sea Pines By-Laws further note that individual Unit Owners should obtain their own insurance policies to cover many of these limitations. Unit Owners should regularly consult with their individual insurance agents to confirm that they have the necessary coverage, especially after making improvements or upgrades to their Unit. It is also important to note that the Master Policy coverage including deductibles is subject to change. Individual policies should include coverage for:

  1. Deductibles
  2. Improvements beyond the original construction
  3. Personal property
  4. Loss of use
  5. Liability

As noted above, the master property damage insurance policies do not cover 100% of the estimated replacement costs for the covered properties. If this is a concern, Unit Owners can also consider purchasing additional coverage under their own policy to cover this gap.

If a Unit Owner fails to obtain such a policy, in the event of any claim, they would be responsible for the deductible and any improvements made to the Unit beyond the level of its original construction.

Copies of the Master Policy can be obtained from the Sea Pines Managing Agent, Mercantile Property Management, to assist you and your insurance agent in planning your coverage.

Requesting a Certificate of Insurance

Unit Owners may require evidence of insurance coverage for purposes of refinancing and other financial transactions. The association’s insurance agency is happy to provide an insurance certificate to a Unit Owner or lender according to the procedure outlined here.