The convenience of condo living can make condos an ideal place to live for people in all phases of life. However, you need to be aware of special insurance considerations and make sure you have the right coverage.
Who Needs Condo Insurance?
Condo insurance is for condo unit owners. While the condo association usually carries insurance coverage, that coverage applies to the exterior building, common areas, and liability claims against the association and its staff. Most condo associations don’t carry coverage that protects individual owners or their personal units.
If you’re a renter in a condo, you would typically obtain renter’s insurance, as the condo owner should carry insurance for their unit. If you’re renting your condo out, you should verify whether your personal condo insurance will cover this rental activity or if you need to obtain landlord coverage.
Do You Have to Buy Condo Insurance?
Buying condo insurance is a smart financial decision since most people couldn’t afford to simply lose the money they put into their condo if something happened to it. Similarly, if you took out a mortgage to buy your condo, you’d still have to pay off your mortgage even if you could no longer live in your condo. That’s why most lenders require you to carry condo insurance to take out a mortgage. Besides, your condo association may have rules that require each unit owner to maintain their own coverage.
What Does Condo Insurance Cover?
Condo insurance typically includes the following coverage options.
- Damage to the interior of your unit. If there’s a fire, water damage, or wind damage to the inside of your unit, you are typically responsible for those repairs whether or not the disaster was limited to your unit or affected the building as a whole.
- Personal property. You also need to obtain your own coverage to protect your personal belongings against disasters as well as theft.
- Personal liability. If a guest or worker is injured inside of your unit, they may be able to file a negligence lawsuit against you. Your liability protection provides your defense and covers any settlement up to your policy limits.
- Additional living expenses. You may need to move out while your condo is repaired after a covered disaster. This coverage can pay for your lodging and other additional expenses during that time.
- Loss assessment. If damage to your building exceeds the condo association’s policy limits and cash reserves, the association may impose an assessment on each owner to cover any additional repairs or other costs. Loss assessment coverage can cover those assessments.
What’s a Bare Walls Versus All In Policy?
Condo associations can maintain two types of coverage for the building. A bare walls policy covers everything outside of the bare walls of each unit. Anything inside of the walls is the responsibility of the unit owner. This can include permanent fixtures like plumbing, flooring, cabinets, and other fixtures. An all in policy covers permanent fixtures as well. The unit owner is only responsible for things they’ve added or fixtures that they’ve upgraded over what’s standard for the building.
How Much Personal Property Coverage Do You Need?
If you file a personal property claim, your property limit isn’t what the condo insurance company will pay you, even if you lost everything. Your condo insurance company will pay you the lesser of the value of what you lost or your policy limit. Therefore, you want to make sure your personal property limit is equal to or greater than the total value of what you own.
Keep in mind that jewelry, electronics, arts, and other high-value items may have special rules. Your policy may cap the value of each individual item, or the item may not be covered at all. If that’s the case, you’d need to purchase separate insurance for each item to be fully insured.
Your final decision is whether you want new cost replacement coverage. Typically, you only get a fraction of what you originally paid for each item in an insurance claim since it depreciates over time. If you want to be able to go to the store and buy brand-new items to replace what you lost, you cost replacement coverage can cover that extra expense.
Do You Need Flood and Earthquake Coverage?
Like homeowner’s insurance, most condo insurance policies do not cover floods, earthquakes, sinkholes, and other earth movements. You would need to obtain separate flood or earthquake insurance to be covered. If you’re thinking about skipping flood insurance because you’re not on the ground floor, remember that a flood can still damage the structure of the building and potentially your unit even if your unit sits above the flood levels.
What if You Travel?
Condos are often a choice for frequent travelers because you can just lock up and go. However, leaving your condo unattended for long periods leaves you at a higher risk of burglaries and greater risk of damage from slow-building problems such as water leaks. Because of this, many condo insurance companies exclude certain claims if you leave your condo vacant for 30 days or longer. If you don’t want to hire a condo sitter, you can add unoccupied and vacant condo protection to your condo insurance policy.
Talk to Your Insurance Agent
innovante insurance can help you figure out what condo insurance you need and where to find the best price.