A condominium is different from a house; for starters, there’s typically no yards to maintain, and certain elements of your home are shared with neighbors. Condominium (or condo) complexes usually have their own sets of rules, and sometimes their own associations for owners, so it follows that condo insurance coverage will be different from other types of homeowners or renters’ insurance.
One of the major differences between owning a home and owning a condo is how much of the residence you must insure. When you own a home, you also generally own the land it sits on and are responsible for insuring the interior, exterior, and the land. However, with condo ownership, owners are only responsible for the residence interior. The outside hallways, common areas, building structures and landscape are jointly owned by all residents of the complex and are covered by the complex’s homeowner’s association.
With condominium insurance, the challenge lies in ensuring that the owner’s condo insurance covers every area they are personally responsible for, leaving no gaps between their coverage and coverage provided by the Homeowner’s Association.
It’s very important to find an agent who is knowledgeable about the requirements of condominium insurance, and will help you find a policy that meets your specific needs. To ensure you have appropriate coverage, here are a few questions you can ask yourself or your agent before purchasing:
What does the master policy say?
The condo association’s master policy should clearly state which parts of the complex are insured through association dues and which parts are not. The association rules should also reiterate this information.
If your master policy is a “bare walls-in” policy, it will typically cover the structure itself but not things like the fixtures, flooring, cabinets, or counters. In those cases, you would need a larger amount of coverage from your HO-6 policy. If your master policy is “all-in,” it would cover those same fixtures, countertops, cabinets, and other additions to the basic structure of the unit, which means your HO-6 policy could be more limited.
How expensive is the association deductible?
Association insurance is typically commercial insurance coverage for common areas and portions of the buildings that have shared responsibilities. This type of policy will cover damage to units caused by disasters or accidents—which often means that owners might be met with a high deductible to pay.
Depending on the situation, that deductible could be the responsibility of one owner, or it might be split between multiple owners. Some deductibles can be as high as $50,000, so it’s important to note that when deciding on individual coverage.
Content or structure?
Individual condominium coverage is heavily based on the contents of the unit. Any personal property such as furniture, rugs, electronics, and appliances would need to be taken into consideration when determining the amount of coverage needed. In the event of a disaster, you would most likely be responsible for replacing anything that isn’t part of the actual structure of the building, which means you would need to assess all of your content and determine its value.
About The Insurance Store
The Insurance Store was created to bring ease and agility to Surplus Lines coverage placement for agents serving commercial and personal lines clients in specific regions throughout the country. We provide a wide variety of packages for hard-to-place products and risks that include earthquakes, floods, hail, and more. To learn more about how we can protect you in the event of an unforeseen event, contact us today at (425) 313-9605.