Whatever type of home you own, you will need insurance to protect your belongings and to cover you if someone is injured on your property. To that end, there are some important differences between insurance coverage for a house and coverage for a condo.
Find Out What the Condo Association’s Insurance Covers
Your condominium association will have an insurance policy, but you will also need your own individual policy. Before you start shopping for insurance, read through your association’s policy to find out what it does and doesn’t cover, so you can figure out what type of coverage you need to purchase individually. If you don’t understand something, ask questions.
If the condo association’s policy is “all in and all inclusive,” that means it covers the exterior of the building and interior surfaces and fixtures, such as appliances, plumbing, wiring and carpets. You will need to purchase insurance coverage for your personal belongings. A policy referred to as “bare walls in and wall studs in” only covers the building’s structure, not interior fixtures or contents. It may cover plumbing and electrical systems in some cases.
How to Choose the Right Condo Insurance Policy
Condo insurance, or HO6 insurance, covers many of the same perils that homeowners insurance covers, such as weather, fire and smoke damage, theft and vandalism. HO6 insurance usually doesn’t cover flooding. A condo insurance policy will pay for living expenses if your home is uninhabitable due to damage caused by a covered peril.
HO6 insurance will provide coverage for medical bills, legal fees and other expenses if you’re found liable for an accident in your unit that injures someone. You should choose enough liability coverage to protect your assets. If you have valuable belongings or savings and investment accounts, you may need an umbrella policy to avoid losing them in a potential lawsuit.
Figure out how much insurance you need for personal property. Consider the replacement value of your belongings, not their actual cash value or their value accounting for depreciation. You may need to purchase a separate rider or endorsement for valuable items.
Members of a condo association collectively own common areas and can be held financially responsible for claims that aren’t covered by the condo association’s insurance, that exceed its coverage limits or that carry a high deductible. In those types of circumstances, the condo association can spread the cost among all condo owners by issuing a special assessment. Loss assessment coverage can help you in such a situation.
Conduct Research to Choose the Right Coverage
Condo insurance is more complex than homeowners insurance because of the way responsibility is shared among individual condo owners, the association and all condo owners collectively. Make sure you understand what you are responsible for so you can choose coverage that best suits your needs.
