Avoid These 7 Pitfalls When Purchasing Condo Insurance
For millions, the decision to invest in a condo makes perfect sense. This housing option gives you the best of both worlds. You enjoy the freedom to modify the inside of the property as you wish and gain equity but with less upkeep like an apartment. When you’re making the transition to condo living, here are some pitfalls to avoid when purchasing condo insurance.
1 - Not having enough knowledge about condo insurance
The first pitfall is not having a complete understanding of all that’s entailed in condo insurance. This coverage protects you from certain losses in the event of unforeseen circumstances.
However, it only covers specific hazards that will be identified in your agreement. It can be somewhat confusing, so ask your insurance agent questions to gain a full understanding.
Ask to review a copy of your HOA’s Master Insurance Agreement. Ask your insurance agent to review it and advise you of any loopholes.
2 – Relying on the protection of your HOA
One of the most significant advantages of condo life is having a Homeowners’ Association (HOA) to maintain the exterior of the property. The HOA typically covers insuring all exterior structures, also.
However, this can vary from one HOA to another. Don’t assume that they cover everything. You’ll find all these details in your community’s master policy.
3 – Not insuring the interior of the condo
Assuming the HOA does cover the entire exterior structure of your building, they probably don’t include replacement of your appliances, flooring, interior walls, or personal property.
It’s up to you to assign a replacement value to all of your personal property as well as an estimated cost of restoring the interior should you fall victim to a tragic event. Ask your agent about replacement value coverage to give you the cash you need to replace your things rather than an amount based on a depreciated value.
4 – Failing to know the HOA’s limitations on common areas
The HOA’s insurance should also cover repairs to all common areas in the event it’s needed. Applicable common areas include the lobby, pool, fitness facilities, bicycle trails, or parks. It’s essential you’re reassured that they can cover the cost of repairs, as these amenities have a direct impact on your resale value.
Additionally, make sure that they carry liability coverage for accidents that could occur in shared spaces.
5 – Assuming HOA liability coverage covers the entire property
HOA liability coverage should cover those common areas we discussed. Unfortunately, that coverage does not extend to the interior of your unit.
If a visitor to your home gets injured due to a slip or even a playful, unintentional nip from an overly-excited pup, you are responsible for covering the costs resulting from that incident.
Bottom line, if a friend’s visiting and falls over the curb outside your condo and gets hurt, the HOA covers the cost. But, if your friend trips over the door jamb to your bathroom and sustains an injury, it’s all on you.
6 – Lack of understanding about weather damage
Like a regular homeowner’s policy, your HOA’s condo insurance policy should cover damage to the property stemming from weather-related events. Lightning damage, hailstorms, or even damage from heavy snow load are included, in most cases.
Wind damage is covered in most areas; however, it might be excluded in hurricane-prone coastal locations. Losses resulting from flood and earthquakes will not be protected, typically.
Take the time to learn whether weather damage is included—and which exceptions exist.
7 – Not getting comprehensive protection
Do you have a priceless collection of rare coins or irreplaceable European stamps? Artwork? A fabulous pile of precious jewelry?
Unique items might require special protection; these are called endorsements. Let your agent know of any valuables; he or she will guide you.
Outside of your condo, do you have a car, boat, golf cart, or ATV? While you’re discussing condo insurance with your agent, have a quick chat to ensure you also have the appropriate coverages on your toys.
The Bottom Line
Moving to a condo is a great move for many people, as it allows you the freedom of home ownership while affording you time away from home maintenance projects so you can enjoy your time. Before you purchase a condo, ask your attorney to review and help you to understand your HOA’s master policy and take time to meet with your insurance agent to ensure you’re insured adequately to protect your lifestyle.