How to Choose the Right Condo Insurance Policy for Your Needs

Posted on May 31, 2019

If you recently purchased a condo, you might still be in limbo about whether to buy insurance for your home. You may think it’s unnecessary. After all, you read in the purchase agreement papers that the condo or homeowners association provides coverage for the whole community, yes?

Well, that’s not the case. You do need condo insurance if you want to protect the inside of your condominium!

Unlike a homeowner, you don’t own the building you live in or the land it’s built on. Your condo association carries an HOA coverage or “master policy” to protect the building and the areas within the community. For example, this insurance pays for accidents that happen outside individual condos or in common areas, but not those within the walls of your condo.

Depending on your HOA coverage, you might need extra insurance to cover repairs inside your unit, replace your belongings if damaged or stolen, and pay for liability costs if a guest is injured in the house. Condo insurance provides this coverage. However, finding the best condo insurance policy to buy can be a daunting task.

Here is everything you need to know about condo insurance to help with your search:

Start By Understanding What Condo Insurance Is

Condo insurance offers coverage for your condominium’s interior. Depending on what the complex’s master policy provides coverage for, your condo insurance could cover:

· Your personal property and valuables

· Appliances

· Special assessments

· Damage to the interior of your unit

· Master policy deductible

In addition to the above, a condo insurance policy provides personal liability coverage to protect you when you're responsible for injuring another person or damaging their property. For example, if a guest slides and falls in your bathroom, you’ll be liable for their treatment expenses. Also, if your kid hits your neighbor’s car while playing, the insurance will pay for the repair expenses.

Condo insurance often covers the loss of use. This means that if your condo becomes heavily damaged by a disaster such as fire or storm, it pays for your expenses to live elsewhere during the repairs.

However, standard condo insurance doesn’t cover perils such as earthquakes, floods, and sewer backups. If you want to protect yourself against such hazards, you’ll need to buy extra coverage. You can contact a local agent to help you find the best condo insurance by evaluating your coverage needs and getting you the best insurance rates.

Learn What Your HOA or Master Policy Covers

The condominium master policy typically covers general liability for the association and property damage in common areas. Basically, the outside areas in your condo complex fall under the homeowners or condo association insurance policy.

Apart from the basics, an HOA can also include coverage for sewer and drain damages, personal liability insurance for board members, and protection against embezzlement of HOA finances. Note that all these don’t protect you as an individual owner. However, if you get injured within the complex’s common area, the HOA liability insurance will cover your medical bills.

There are three types of condo association insurance policies:

  • Bare walls” coverage - This policy doesn’t cover anything within your condo’s walls. It only includes the building structure and fixtures that are used by a group. That means items like your kitchen’s countertops, flooring, and wardrobes aren’t covered. Renovations and upgrades are also excluded, as well as anything considered personal property.
  • “Single entity” coverage - This policy covers the building’s structures, fixtures in individual condos, and common areas. It doesn’t include personal items or upgrades done on the house, however.
  • “All-in” or “all-inclusive” coverage - This policy covers the building’s structures and fixtures (such as appliances, and plumbing and wiring systems) in individual condos, plus any upgrades done on the unit. The policy pays for the entire renovation fees to get your house back in its former state if a covered catastrophe strikes. However, it doesn’t cover your personal property and belongings.

Note that most master policies have a deductible, which is passed down to individual owners if a loss occurs. If there are 20 unit owners, the deductible is divided 20 ways. Be sure you understand what level of coverage your HOA policy provides before you begin searching for condo insurance.

Consider the Type of Coverage You Need

When you know what your master policy covers and excludes, go ahead and look for an insurance policy that includes coverage for all your needs. Some of the essential inclusions you’ll need to look out for include:

Theft Coverage

If you want to protect your possessions against burglary, look for a policy that includes personal property coverage. Depending on the type of insurance plan you go for, items stolen from your car may also be covered. It’s important to note that not all items in your house will be included in your coverage.

Some items will have specified limits, while others will be excluded entirely. Be sure to check what the policy covers and find out if you need to pay additional premiums for full coverage of certain items. This may include costly art, jewelry, and other valuables.

Before choosing a policy, take stock of all the items you need to protect. This will help you know the total value of your possessions so that you can take adequate insurance coverage for them. You may be surprised to discover how much you have that’s worth protecting.

Special Assessments Coverage

Standard condo insurance policies don’t often cover special assessments. Some plans, however, include coverage for “named perils” such as earthquakes, floods, hurricanes, and sewer backups. Special or loss assessment coverage is crucial when a disaster such as a storm strikes and causes extensive damage to the complex.

For example, if strong winds damage the condos’ roofs, and the repair bill exceeds the HOA’s insurance coverage, the extra burden will be passed down to owners. It can be a nightmare when a massive bill slaps you on the face out of the blues. But if you have a condo insurance policy with special assessments coverage, you’re safe.

Loss of Use Coverage

Look for a policy that can cover your stay elsewhere when your unit is under repair or restoration. A natural disaster or human-made activity can render you homeless without warning. For example, if part of your complex catches fire and firefighters flood your condo while putting it out, you’ll have to vacate.

Without loss of use coverage, you’ll be forced to pay expensive hotel bills during the repairs. Or you’ll have to camp in an RV the entire period - which is a great inconvenience!

Medical Coverage

Get a condo insurance policy that absorbs your liability in case an injury happens to someone within your unit. If a guest slips and breaks their leg in your bathroom, they can sue you to pay for their medical expenses. A policy with medical coverage helps you avoid such a scenario, saving you money and friendship at the same time.

Appliances Coverage

Most condo insurance policies typically cover appliances. But it’s necessary to review the specifics of the policy you’re choosing to understand its limits of coverage. Different insurance plans have varying coverage levels, so be sure to get the one that’s adequate for your needs.

Also, if you choose to upgrade your appliances, follow suit with your policy to make sure the new items are fully covered.

Determine How Much Condo Insurance You Should Have

You can determine the amount of condo insurance you need by calculating the total value of your possessions. To do this, find out how much it would cost to replace them in case of a fire accident, earthquake, or burglary. The key thing to note is that your policy coverage limits are high enough to cover your valuables worth.

For example, if you have $10,000 diamond earrings, and your per-item coverage for jewelry is $5,000, your insurance is inadequate.

If your HOA has “bare walls” coverage, you’ll need insurance that’s adequate to cover for condo renovation costs. An agent with knowledge about local building costs can give you an estimate of renovation costs per square foot. You can also hire a contractor to provide you with a detailed building appraisal for about $300.

Determine the Cost of Condo Insurance

The cost of condo insurance depends on the value of your unit and the amount of coverage required. On average, it ranges from $100 to $400 per year. If your HOA has an “all-in” coverage, you can go for a policy with liability and personal property insurance only. That will cost only about $200 per year.

If the HOA has “bare walls” coverage, and you have many items to cover, your costs will be higher. Also, if you have kids and pets that increase your potential liability, or live in a flood-prone region, your premiums will be high.

Your Ultimate Guide to the Best Condo Insurance Policy

To find the best condo insurance policy and best condo insurance providers, first, understand the basics of this coverage. A local agent can help you with the search for a perfect condo insurance policy. This will depend on your specific insurance needs based on all the factors mentioned above.

Contact us today for more about condo insurance!

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