If you own a condominium, you have some insurance protection from your condo association because it insures the building structure and common areas. But in many cases, your association’s master policy insures only to the outside walls of your unit.
Even when that policy stretches to built-in fixtures, you still need protection for your belongings and financial assets. Condo insurance can provide that protection, covering:
- Damage to the interior of your condo unit,
- Damage to or theft of your personal property,
- Claims you are liable for injuries sustained by others in your condo unit,
- Liability costs if you accidentally injure someone off your premises or damage their property, including associated legal costs, and
- Surprise assessments from the condo association.
It can also cover the cost of a hotel or other living expenses if your unit is damaged by an insured loss.
Condo Owners Dwelling Coverage
Step one in getting the right condominium insurance is to understand what your condo association’s master policy covers. Some insure just the building envelope (structure and exterior coverings), common areas, and plumbing/electric inside the walls, while some insure the structural portions of the units and their coverings. An all-in master policy can include wall framing, wall board (like drywall or plaster), subflooring, floorboards, original cabinets, and built-in fixtures, such as lighting, toilets, sinks, bathtubs, and showers. For everything else, such as improvements, upgraded finishes, and plug-in appliances, or if your condo association master insurance is a “bare walls” policy, you’ll need dwelling coverage for condominiums.
Dwelling coverage helps pay for damage to the interior of your condo from events such as:
- Fire or smokes
- Burst pipes
- Water intrusion (such as rain)
- Vandalism
- Windstorm (with certain restrictions in some regions)
You will likely be required by your mortgage lender and your association bylaws to secure a condo insurance policy with dwelling coverage, often called an HO-6 policy. Your insurance agent will work with you to assess where your association’s master policy stops and your responsibility begins. Any improvements you make will be assessed for value and can be included in your personal condo insurance.
Condo Owners Personal Property Coverage
An HO-6 condo owners insurance policy also insures your personal property, which means the contents of your condo, such as clothing, furniture, cookware, and electronics. If you have a storage unit in your building, ask your agent if your policy extends to that space or possessions you keep in an off-premises storage unit. It likely does, but it may have restrictions on the amount of coverage.
Check with your insurance agent to see how to get insured for flood, earthquake, or windstorm. Options vary by peril and, sometimes, by state. For example, flood insurance can be purchased by the unit owner or the condo association and can compensate one or both of those entities. Contents coverage is optional. You can even buy tailored flood insurance using an excess and surplus policy, or through the specialty market.
Condo Owners Personal Liability Coverage
Part of a condo insurance policy is the liability protection it offers. Personal liability insurance helps cover the costs to remedy a visitor’s injury that occurs at your residence as well as expenses if you were to accidentally hurt someone or damage their property off your premises. Your condo owners personal liability insurance can also cover the actions of your pets at and away from your residence. It helps pay for both compensation and legal bills, which are often referred to as “suit defense” costs. Even if you are found not to be at fault, suit defense costs can be substantial.
Here are some situations where condo personal liability insurance can help protect you from large financial losses:
- A guest slips on your entryway mat and fractures their tailbone. That person seeks payment from you for medical costs and lost pay. Your condo policy’s liability insurance will help you pay that compensation plus any legal bills that ensue.
- Your dog jumps on someone and knocks them down, causing a back injury. You could be on the hook for treatment, rehab, days away from work, pain and suffering, and legal costs. Without personal liability insurance, you would have to absorb the entire financial burden.
- Your child hits a divot while riding a bike at a friend’s house and crashes into a neighbor’s car. Personal liability insurance would cover repairs to the vehicle after you pay your deductible.
If you have a personal umbrella policy that provides higher liability limits, you should be sure to understand what your condo owners personal liability policy insurance limits need to be to satisfy the umbrella limits.
If your condo or auto liability limits are lower than the amount the umbrella policy mandates, you could end up with a “coverage gap” making you personally responsible for the difference.
Will Condo Insurance Pay If a Disaster Makes My Condo Unsafe?
If a fire or other covered event prevents you from occupying your condo, you may face hotel and other expenses, such as restaurant meals, while your home is repaired. Coverage called ALE, or additional living expenses, can be added to an HO-6 condo insurance policy if it isn’t already included.
ALE coverage, also called “loss of use,” normally limits insurance payments to about 20% to 40% of your dwelling coverage limit. ALE covers the costs of displacement that exceed your normal expenditures. It’s common for insurers to limit the duration of ALE benefits, so check your policy terms so you don’t get caught off guard. If the whole condominium complex, not just your unit, is rendered unlivable, it could take a very long time to restore it to full use. Note that ALE is usually offered on a reimbursement basis, where you pay for your expenses and get the money back (less your deductible) after you send your insurance company the receipts.
Condo Insurance for Special Assessments by the Association
When a disaster strikes — or maintenance has been deferred too long — your condo association may impose a steep fee on condo owners if its master insurance policy and maintenance fund can’t cover costs. Some condo insurance builds in protection for special assessments, but if yours doesn’t, you can usually add it by endorsement to your policy. It will help ease the pain of the outlay. Your agent will make suggestions on the amount of condo special assessment insurance based on your association’s master policy coverage.
The Benefit of a Professional Condo Insurance Agent
Condo insurance depends heavily on your condo association’s master policy and local availability of certain weather-related coverages, so it’s best to work with an independent agent to get a policy that best aligns with your needs. Locate a trusted condo insurance agent near you today.