A column by the president of the Marco Polo owners association in 2013 spelled out how a fire earlier that year made it difficult for the building to obtain insurance.

Helene “Sam” Shenkus explained that a fire in early 2013 destroyed an apartment on the 8th floor of the building, with additional smoke and water damage to other apartments and common areas. The loss was put at $1.1 million.

After covering the loss, the building’s insurer declined to renew the policy.

“…Over 20 companies declined to provide a quote,” Shenkus wrote. “It was a struggle to find carriers willing to take on the risk. Finally, a layered coverage solution was created in which several companies take on the risk….The carriers willing to insure Marco Polo increased premiums and raised the deductible from $5,000 to $25,000 per occurrence. So not only have premiums doubled, the deductible went up.”

And that was with a million dollar loss. Last week’s fire will be many times as costly, with a reported 200 units suffering some damage, and perhaps 50 heavily damaged or destroyed.

Will the building be able to obtain new insurance coverage going forward? And, if so, at what cost? And what happens if insurance can’t be purchased? Is that a possibility?

These are issues facing all owners in the building, who must insure the contents of their units, as well as the Association of Apartment owners, which has to obtain coverage for the building itself.

And Shenkus then addressed a question: “What if your apartment was gutted by fire?”

She noted that although the association’s insurance would rebuild, it could takes months or, perhaps, a year or longer. During that time, although not able to live in the apartment, the owner(s) would still have to pay monthly maintenance fees as well as mortgage payments.

Then, when ready to move back in, another realization. “Now you realize you have no furniture, bed to sleep on, pots to cook with, or dishes with which to eat,” Shenkus wrote.

Soon after the newsletter was distributed, Marco Polo required all owners to obtain at least a basic insurance policy, referred to as an HO-6, that covers damage that the association’s master policy would otherwise exclude.

According to the Hawaii Condo Law blog:

For instance, if there is a fire, the master policy will not cover the personal property in the apartments. Second, the master policy does not cover apartment owners for liability claims inside the apartments. If your guest slips and falls in your bathroom and sues you, the master policy will not cover you or your guest. Third, most condominium master policies do not cover improvements or upgrades inside the apartment. The most that these master policies will cover is the cost to restore the apartment to the original condition even if you made changes to your apartment (presumably with Association approval). Fourth, some condominium master policies do not cover anything other than the common elements and the walls, floor and ceilings.

These current and future insurance issues are creating lots of uncertainty and fear. At least one realtor has speculated that apartments in the Marco Polo could lose most or all of their value. I don’t know whether that’s at all realistic, but that’s the problem. Uncertainty appears to be a major risk for all Marco Polo owners, and for owners of units in other unsprinklered buildings.