Did you know most condo owners need insurance? But you probably don’t know what condo homeowners insurance is or what it covers. Here’s your guide.
You know that when someone buys a home, homeowner’s insurance is a requirement. It makes sense because you need to protect the home from fire, theft, and other concerns.
But what about a condominium? Doesn’t the condo association cover the building through association dues?
The answer is yes – but you still need condo homeowners insurance. Here’s why.
Understanding the Purpose of Insurance
Most people understand that the purpose of insurance is to help out in case of a catastrophe. Car insurance helps you if you crash your car. Home insurance helps you if the house burns down.
However, there’s another aspect of insurance that’s often overlooked – liability coverage. Who pays for the other car if the accident is your fault? Who pays if someone is hurt in your yard?
Homeowner’s insurance covers both sides – the actual property and the liability if someone else is hurt or has property damage.
What Insurance Does the Association Have?
In most cases, the condo association maintains insurance for the main building if you live in a multi-unit complex. There will also be coverage for common areas such as pools, hallways, and community centers. The association policy is called a master policy.
The type of insurance included in the policy will make a big difference in the condo insurance you choose yourself, so be sure to ask!
Sometimes the association only covers the bare walls of the building and liability in common areas, and nothing more. This means that you need your own coverage for even your wiring and plumbing!
Sometimes there is additional coverage for permanently installed fixtures within your unit – an “all in” policy. However, renovations are not covered – just original materials.
Some associations cover you for wind and flood, and some do not. Ask questions and make sure you understand what the association covers so that you know what additional coverage you need to purchase.
Why Do You Need Condo Homeowners Insurance?
If the condo association covers the primary building and common areas, why do you need additional coverage?
Simple – for everything inside your condominium!
If there was a fire, the association’s commercial insurance might cover the main building, but what about the items in your condo? What about any upgrades you’ve done, such as wood floors or granite counters? What about hotel bills if you have to live elsewhere during repairs?
Even an “all in” master policy from the association won’t cover these concerns. Personal property, displacement, and upgrades are all items you need to cover through your own policy. You’ll also need your own insurance in case the damage exceeds the limits of the association’s master policy.
There’s also the risk of theft. If something is stolen, the association won’t cover that. You need to have your own policy.
Finally, there’s liability to think about. If someone is injured in the hallway, that’s the association’s responsibility. However, if someone is injured inside your unit, you are liable.
As a result, it’s important for condo owners to have condo homeowners insurance, also known as an HO-6 policy.
How to Choose Condominium Homeowners Insurance
Understanding that you need condo homeowners insurance is only part of the battle. Next, you need to know how to choose the right coverage for your needs.
Condo insurance costs vary depending on a variety of factors, which include where you live, the construction of your condo, how much the master policy covers, and the options, limits, and deductibles you choose.
Replacing Your Belongings
To determine how much coverage you need for personal property, do an inventory of your belongings. It may seem like a lot of work, but it will ensure that you get appropriate coverage. Don’t skip your appliances!
While you’re doing this, take pictures and create a written list of what you own. This will help you if you ever have an insurance claim because it will be much easier to prove your losses.
Find out if your association’s master policy covers fixtures in your home – if not, you’ll need to add extra coverage for that. You’ll also need extra coverage if you’ve done renovations or upgrades.
Finally, you’ll have to decide between replacement coverage or cash value coverage. Replacement value will help you get new similar items, where cash value coverage will pay you the depreciated value of the items instead.
If you own something especially valuable, be sure you list it separately on your policy. There are limits in terms of coverage for certain types of property, such as jewelry or art. To make sure your valuable items are fully covered, make sure they are specifically listed and valued.
Liability Coverage
Unfortunately, it seems everyone is lawsuit-happy these days. Even best friends sue each other over injuries and foolish disputes.
As a result, it’s important to make sure you have enough liability coverage in case someone is injured in your condo. Think about how much it takes to cover your assets and keep you from being sued penniless.
You may want to think about getting an umbrella policy, which provides additional liability coverage over and above your condo insurance and auto insurance plans.
Living Expenses Coverage
If you are ever displaced from your condo due to damage, you want to make sure you can get paid for the costs to live elsewhere for a period of time.
Make sure that your condo insurance policy covers the expenses that can result from having to live someplace else while your condo is repaired or rebuilt. Those can add up fast if you have to pay them yourself!
Get the Condo Insurance You Need
Condo homeowners insurance is not optional when it comes to protecting your property and your financial future. It’s important to know what your association’s master policy covers so you can fill in the gaps with your own policy.
If you’re ready to get started with a condo insurance policy, contact us! We’re here to help you protect what matters.
