Understanding your Condo Insurance

When you are looking at buying a condominium, you learn that condo insurance is different than the typical homeowner’s insurance. There are components of a condo insurance that are different from other types of insurance policies out there.

Real Property Protection: Items not typically considered personal property may fall into real property. This coverage will protect fixtures and installations within the home. The condo association has a master policy to cover common areas, like the building exterior and walkways. When determining how much insurance is necessary, you need to know where the master policy ends. There are two basic types of master policies. A “Bare walls in” policy covers all the real property from the exterior framing inward. It will not cover fixtures like countertops and flooring or installations. An “All in” policy covers fixtures, installations, and additions with interior surfaces of walls, floors, and ceilings.

Personal Property Protection: This protection will cover the cost to replace your lost or damaged stuff. If your television is stolen, this coverage will help replace it. An actual cash value option will reimburse the depreciated value of your possessions. This means if your $2,000 television was only worth $900 today, then you would get $900 towards replacing it. A replacement cost option covers the actual cost to replace the property today. This means that you would get $2000 to replace the television.

Liability Protection: If someone on your policy injures or causes property damage to someone else, the liability protection will help you. This coverage assists with compensation for the injured party and cost of any court fees up to the limits of the policy. If someone filed a lawsuit against you, this coverage will help.

Guest Medical Protection: If someone gets injured in your condo, whether it is your fault or not, this provides coverage for reasonable medical expenses.

Additional Living Expenses: If you are unable to live in your condo due to a covered peril, coverage on increases in living expenses are covered. If you must live in a hotel or need help covering cost of food or other expenses during this time period, you will have coverage.

Loss Assessments Coverage: If something happens in a common area, the Condo Association’s master policy would cover the cost. However, if the cost was more than the coverage in the policy, the association may levy special assessments on unit owners. For example, if there was a fire in the lobby and damages were $5,000, the Condo Association’s policy is charged. However, if the policy only covered $3,000, then the remaining $2,000 would be divided between the unit owners. The loss assessment coverage will pay your share of assessments up to a certain amount.

With a clear understanding of the components of condo insurance, it is easier to figure how much insurance coverage you will need. Before selecting your condo insurance, make sure you understand how much coverage your condo association carries and what parts of the condo your association does not cover.