Published: November 2014
You have the keys to your new condominium in your hands, and you're ready to move in. But are you, your home and your belongings protected? When it comes to condos, insurance is usually held by both the condo association and each condo unit owner. Therefore, to make sure you have the right protection for your condo, you must first understand what is covered by your condo association.
If your building is part of a condo association, the structure itself and common areas may be covered by the association's master policy. According to the Insurance Information Institute (III), these areas may sometimes include the boiler room and the roof, as well as hallways and other shared spaces, including the common rooms and swimming pool.
In some cases, the master policy may cover the structure of your own condo unit, including the walls and the floors, the III says. Other master policies might provide coverage for your unit's original construction and fixtures, while others might cover only bare walls, ceilings and floors, according to the III. The terms of the master policy can affect your own insurance coverage of the unit. It's a good idea to brush up on what protection your condo association has in place so that you know what types of coverage your personal policy should provide, according to the III. Keep in mind there are thousands of condo associations in the U.S., allowing for plenty of variations in insurance policies. The III suggests reading your association's bylaws to learn what parts of your home are covered by the master policy and which parts you will need to insure on your own.
Condo insurance generally helps protect your unit against a number of perils, such as fire, theft or vandalism, according to the III. A typical condo policy offers protection in three areas:
- Building Property Protection This type of coverage typically helps protect the walls of your condo unit and its interior, which could include items such as built-in bookcases and fixtures.
- Personal Property Coverage From your electronics and appliances to clothes and books, there are plenty of personal items in your condo that you may want insured in the event of loss. Because personal property is typically not covered by an association's master policy, condo owners usually must purchase individual policies that include this type of coverage.
- Personal Liability Coverage If someone is accidentally injured while visiting your condo, this coverage can help protect you in the event that you're named in a lawsuit, according to the III. It may also help cover your guest's medical bills. Keep in mind that limits are usually associated with condo liability coverage, which means the policy will likely provide coverage up to a certain amount.
Condo owners can typically choose from different levels of personal property coverage, according to the III. They include:
- Actual cash value, which is a form of protection designed to help you replace your belongings after depreciation is factored in.
- Replacement cost coverage, which may help you replace belongings without taking depreciation into consideration.
Many insurance providers offer add-on protections for occurrences not covered in a standard policy. The III outlines a number of such coverages. For instance, unit assessment coverage may help cover your share of a special assessment charged to all unit owners following a fire in a common area.
Flood: Flood damage is typically not covered by a standard condo policy, according to the III. Most flood insurance policies are issued through the National Flood Insurance Program. In some cases, you may even be required by your mortgage lender to purchase flood insurance, according to the program.
Umbrella Coverage: For additional liability protection, you may want to consider investing in a separate personal umbrella policy. This kind of policy goes into effect when you reach the limit of your condo's liability coverage and can help protect you against large liability claims or judgments. It may also help provide protection if you are sued for libel or slander, according to the III.
Your insurance provider may require a certain level of liability coverage on your standard condo policy generally $300,000 before you are able to purchase an umbrella policy, according to the III.
Endorsements: Additional personal property coverage, also referred to as "Scheduled Personal Property," is typically available for an additional cost. For example, while a standard condo policy typically caps coverage for jewelry at $1,000 or $2,000, scheduled personal property coverage, often known as a "floater" or "endorsement," may provide greater protection for your valuables, according to the III.
When it comes to insurance for your condo unit, you should make sure you have ample protection. Discuss with your agent the condo insurance policy that's right for you.