Many people mistakenly think that renters insurance and condo owners insurance are one in the same, however the differences between them are important to understand to ensure a proper fit in an individual’s living situation. Renters insurance is primarily used to cover the renter’s possessions, accident liability, and displacement costs, whereas condo insurance is a policy obtained by the owner of the unit to work in conjunction with the association master policy and to cover what that master policy does not.
Renters insurance is available to those who are renting a dwelling. In its simplest terms, it protects the renter from theft, liability (a guest slipping on an icy sidewalk), and his or her possessions from damage (fire, lightening, snow, etc.). This type of insurance policy does not cover the dwelling itself, as the dwelling should be covered by the owner of the property through a home owner or hazard insurance policy. Sometimes a renters insurance policy may even cover displacement expenses such as when compacted snow collapses the roof of a dwelling and the renter needs to live elsewhere until repairs can be made. As with most insurance policies, a renters policy allows the insured to set limits on the amount of coverage and the deductible needed.
CONDO OWNER’S INSURANCE
Condo owner’s insurance is similar to renters insurance in that it covers personal property in the event of damage or theft as outlined above, but it differs in that it can be structured at times to cover any upgrades made to the unit by the owner, such as with high-end carpet installation or upgraded alterations. The most important aspect of this type of policy is that it should be designed in such a way as to fit together with the unit’s accompanying Home Owner Association (HOA) master policy, like two pieces of a puzzle fit together – preferably with no gaps. It is vital for the condo owner to be familiar with his or her association’s covenants, codes, and regulations (CC&Rs) that are outlined in the master policy, which should list exactly what is coved. Generally, the master policy covers the basic building (roof, floor and walls), but it can even cover fixtures inside the unit and improvements. Knowing what is not covered by the HOA policy is key in order to make an informed decision on what coverage should be included in the unit owner’s condo insurance.
Knowing what is and is not covered in individual policies will go a long way towards helping anyone create an individual insurance policy that fits well. And, having a good fit may make the difference in the long run between being covered and having to cover expenses out-of-pocket.