Every year, approximately one in 20 homes across the United States that hold homeowners insurance files for a claim.
Accidents happen. But when they do, you might be caught unaware as a condo owner. Owning a condo means your unit is part of a shared complex. When these accidents happen, how you deal with the resulting costs depends on where the accident occurs within the complex.
Thus, condo insurance is invaluable in helping you hedge against these unforeseen issues that can potentially wipe you out. Here’s a compact guide on condominium insurance to help you figure it out.
What Is Condo Insurance?
Condo insurance, also known as HO-6 insurance, is a type of homeowners insurance policy specifically catering to condominium owners. With this policy, the perils protected against are named within. It covers your property, you, and your unit from the outermost walls inward.
A condominium insurance policy is referred to as a walls-in policy since it covers your unit. On the other hand, your condo building itself is covered by the master policy. The master insurance policy also covers all common areas in the condo building.
Why Condominium Insurance Matters
Since the complex is covered by the master policy or the homeowners association (HOA) one, you might be tempted to think you’re fully covered. The master or HOA policy only applies to the common areas and the condo’s exterior.
If anything perchance were to happen to your condo’s interior or your property, you will be on your own. Additionally, if anyone happens to get injured while in your condo, you will be on the hook for any claims since the building’s master or HOA policy can’t cover you. The same applies if you end up damaging someone else’s property.
What the Condo Association or HOA Master Insurance Policy Covers
For you to know what you need to protect against with a condominium insurance policy, you first need to identify what the master policy covers.
The master insurance policy will cover all common areas and many interior features such as the roof, elevators, and walls. In addition to that, the master policy will also include the condominium’s building structure.
Since the HOA or condo association purchase this policy, in reality, all the condo owners share in the cost. Part of your recurring HOA or condo fees go towards paying for the master policy.
Condo master insurance policies come in three main types:
- Bare walls coverage policy: Takes care of fixtures and furnishings in common areas, the structure and any property owned by the condo association
- Single entity coverage policy: An extended version of the bare walls coverage policy that covers most built-in property such as individual condo unit fixtures
- All-in coverage: Covers all property that is part of the condominium structure or that is owned by the condo association
The kind of coverage the master policy delivers will directly influence the amount of condo insurance you end up with. Therefore, before buying a condo policy, you should first ask your HOA to give you a copy of its declaration page. The declaration page lists vital policy information and what is covered under the policy.
What Condominium Insurance Covers
Condominium insurance is not mandatory by law, but at times your condo association might set some minimum standards for coverage. Should you have a mortgage on your condo, the lender will typically require you to get a condo policy. Here’s a look at some of what an insurance policy for your condo will cover.
1. Personal Property
Whether your condo complex has an all-in or bare walls master policy, you need to cover your property because that’s not included in the master policy. Some of the belongings you can cover with a condo policy include your furniture, clothing, and computers, among others.
Once your property gets damaged or stolen, you will file the claim through the personal property coverage. Just like with other types of homeowners insurance, condominium insurance also follows you around the world.
2. Your Condo’s Interior
Since you only own your unit and not the entire building, you would need to consider insuring your interior fixtures. These include lighting, appliances and cabinets, among others.
If your condo building’s master insurance is an all-in one, then you may not need to insure your condo’s interior. An all-in condo master policy will cover the interior fixtures, cabinetry, lighting, and plumbing, among others in your unit.
However, if the complex’s master policy is only a bare walls one, then getting an insurance policy for your condo is critical to protecting your unit’s interior.
3. Liability
A condominium insurance policy protects you from financial damage should someone file a lawsuit against you for various reasons.
If someone gets injured in your condo and needs medical care, a condo policy helps you cover the court-ordered medical expenses should the person sue you. Some of the medical costs here include ambulance services, physical therapy, imaging, and testing, among others.
Condo liability also helps you in the event you cause damage to another person’s property. For example, if you visit a friend and spill red wine on their $15,000 carpet, they can sue you for damages. Condo liability can help you pay the costs for the accident.
Condo liability coverage, in some instances, can also help you take care of pet-related damage. If your dog bites someone, for example, your liability coverage can help pay for their medical expenses.
Changes that accrue due to a lawsuit someone brings against you can also be covered under your condo liability. Thus, you can take care of the lawyer’s fees, on top of any damages the court may award the plaintiff.
When you are debating getting condo liability coverage, keep in mind that the complex’s master policy does not offer any liability coverage within your unit. It will only cover liability due to damage across the common areas.
4. Loss Assessment
Condominium insurance can help foot the bills when you are held responsible for expenses due to deductibles or damage (known as loss assessment).
Protect Your Condo
As a condo owner, you should anticipate and prepare for unforeseen accidents within your unit that might lead to burdensome financial obligations. Condo insurance covers you against damage and liability, ensuring that you can always resolve accidents regardless of if you have money or not.
Amistad Insurance is a customer-oriented Raleigh insurance agency with over 20 years of experience. Contact us today to discover the best insurance options for your condo.
