What Insurance Do I Need for My Condo?
As a condo owner, it's essential to understand your insurance needs, including what is typically covered by the condo association's policy and what insurance you need for yourself. Having adequate insurance can help protect you and your assets in the event of damage or loss.
What is typically covered by a condo association's policy?
A typical condo association's policy, which is known in the insurance business as the master insurance policy, provides insurance coverage for coverage for damage to the building, elevators, sidewalks, exterior walls, and other common areas. Common areas are generally defined as the amenities or spaces available by all dues-paying homeowners living in the building or development; common area examples include; entries, hallways, park spaces, pools, beach areas, walking paths, gyms, athletic courts, fields, clubhouses, and pavilions.
What is not covered by a condo association's policy?
The condo association's policy typically does not cover the interior of individual units or personal property.
Why might you need additional coverage for your condo?
While the condo association's master insurance policy provides coverage for the building and common areas, it does not typically cover your personal belongings, the walls, flooring, and fixtures within your unit. To protect these assets, you may need to purchase a separate insurance policy, such as a condo insurance policy, and these are usually designated as a standardized HO-6 policies. A condo insurance policy is purchased to provide coverage for:
- Personal property: Coverage for your personal belongings, such as furniture, clothing, electronics, and other items.
- Loss of use: This is coverage for additional living expenses when you need to relocate temporarily due to damage to your condo unit.
- Liability coverage: Protection against legal and medical expenses if someone is injured or their property is damaged while on your property.
- Personal improvements: Coverage for upgrades or renovations made to your condo unit, such as new flooring or fixtures.
When living in a flood-prone area, in addition to a condo insurance policy, you may also want to consider purchasing flood insurance. Flood damage is typically not covered by a standard condo insurance policy or a condo association's master policy.
Is Condo Insurance required?
As with other types of homeowners insurance, most mortgage lenders will generally require you to buy condo insurance. Having condo coverage in place protects the lender's financial interest during the duration of your loan.
Even if you've paid off your mortgage or bought the property outright, you might still be required to purchase condo insurance. Many associations demand unit owners purchase individual condo policies, and they may specify minimum levels of coverage. The reason for this is best understood with an example: your neighbor is cooking and has a grease fire in their unit. The damage spreads through their unit, breaking through the wall into your unit and causing smoke damage to the common hallway. Your condo association wants to ensure adequate insurance to repair the damage within both units and clean the smoke damage to the common area.
Condo Insurance Limitations
Keep in mind that standard condo insurance policies have limits on certain valuables, such as fine art, electronics, jewelry, and antiques. So, if you have such items, you may wish to purchase an endorsement or "floater," which provides additional coverage for these.
Condo Insurance Helps With No-Fault Issues
The condo policy can help you with some unique situations. Say there was a pipe between units that burst, but no unit owner is clearly at fault. Your condo insurance should cover the damage to your unit, and the neighbors' insurance would cover any damage to their units. Fault and who pays is a matter for the insurance companies to deal with, but the thing you should know is that you will be covered and not trying to get the association's master insurance to cover your loss (which can be very difficult or impossible).
Does renters insurance have the same coverage as condo insurance?
If you are renting an apartment in a condo, the coverage that renters insurance provides is very similar to condo or homeowners insurance.
Renters insurance is important to have for anyone living in a property that they are leasing. It protects your personal belongings just like condo insurance does. And similar to an individual condo insurance policy, renters insurance won't provide structural or dwelling coverage on the building you're living in. That is the responsibility of the condo association's master policy; you only have to worry about having coverage for your personal belongings.
Special Notes for Those Working From Home
While condo insurance will cover any damages to your personal property, remote workers must ensure that their professional business property is also covered. In some cases, condo insurance will protect business equipment to a degree. For instance, insurance companies will often pay out a certain amount if a remote employee accidentally damages their work computer while at home. However, the payout is often significantly reduced if you damage a work computer while working at a café or carrying the computer outside.
Most full-time employees who are working from home are often covered by their employers' business liability insurance, so if company property is stolen or damaged, it won't come out of your pocket to repair or replace these expensive items. This coverage should also extend to employees that are physically injured. If you are a remote worker and hurt while working in your home office, you are often entitled to worker's compensation. Because there can be several differences between policies, remember to always check with your employer so that you know exactly how working from home affects your insurance as an employee.
Buying Condo Insurance
Before purchasing insurance, it's always a good idea to speak with a trusted insurance professional for personalized advice and guidance; they can help you determine the best coverage based on your specific needs and circumstances. After you know what coverage you need, be sure to shop around. Get at least three quotes for similar levels of coverage and with equal deductibles; different companies can offer very different prices for the same levels of coverage. Buyers who shop around will generally save a significant amount on their purchase.