Condo Insurance

What Kind of Insurance You’ll Need for a Condo

Before discussing the importance of purchasing condo insurance, lets define the word condominium as it relates to home ownership. Condominium is a legal term describing a multi-structure accumulation of homes and the land they are built upon. Individual ownership is limited to the air space and the physical boundaries as set forth in legal descriptions which are executed and recorded by the developer.

The home owner owns the unit but not the land beneath the air space. In addition, the halls, exterior walls, garages, parking spaces, landscape and amenities are comprised of a legally shared, interest ownership with the other condominium owners. Finally, the term condominium refers to a type of ownership, rather than the type of unit it is, such as condo, town home, apartment or co-op unit.

With condominium ownership comes representation through the home owners association (HOA). The HOA purchases master insurance policies to cover replacement costs for damages to the outside physical structures and common areas of the development. Each homeowner owns a share of the interest in the HOA and is responsible for paying monthly dues to cover the financials but, the homeowner, not the HOA, is responsible for everything inside their condominium. This is why it is vitally important to purchase a personal condo insurance policy covering everything of value to you.

Computing the value of the personal belongings found in your condo is the first step in planning for an unanticipated and financially devastating event caused by fire, flood, smoke, theft or other damages. Begin by listing all items that have value including; clothing, jewelry, furniture, art work, household items, dishes, utensils, appliances, and any upgrades you have made to the unit as well.

A homeowner is potentially responsible for damages having to do with personal injury occurring on their property. If a housekeeper trips, falls, fractures a hip, and decides to hold you responsible, you could be liable for damages. For this reason, “Personal Liability” insurance is another important consideration. If you own and rent out your condo, there is also potential risk for damages suffered by tenants. A “Personal Liability Umbrella” contributes additional protection beyond standard policy limits.

Another consideration is the cost of alternative living arrangements should your unit be in need of extensive rehabilitation as a result of substantial damages. “Loss of Use” Condo insurance is a necessity if you are not able to cover the cost of operating two homes during the time it takes to make repairs. Investigating “Loss of Use” condo insurance coverage could be a tremendous savings at a time when you are vulnerable to significant financial losses. .

The next step is to select several reputable insurance companies, conduct research into the type of condo insurance polices they offer, and choose the one most beneficial to you. Policies range from those offering very basic coverage to much more comprehensive policies, including umbrella and loss assessment policies for homeowners who potentially may be assessed for losses affecting the condominium project, additional living expenses when the condo is not inhabitable due to damage, absentee ownership programs, and fair rental value policies for lost income resulting from damages to rental properties.

The media is full of tragic reports concerning people who have recently suffered the loss of their homes, condos and personal belongings. The emotional consequences of these life altering events are difficult enough to deal with but the potential financial impact may never be recoverable without appropriate insurance coverage. Protect yourself from such an event, reduce your exposure to financial risk, and cover your liabilities with a comprehensive condo insurance policy. Then get a good nights sleep.