Just like owning a single-family home, condo owners also need insurance to protect themselves. However, since all the condo owners own the building and common areas, you need to understand what the condo association will cover versus what you need to cover. This will determine what condo insurance you should buy.
What Does Your Condo Association Cover?
Your condo association should cover commonly owned areas. That’s the building itself, including the roof, elevators, lobby, exterior doors, etc. It should also include common areas such as gyms, pool buildings, and party or meeting areas. Some condo association policies stop at your walls. That means they cover anything outside of your walls, below your floors, and above your ceiling but not inside of your unit. Others may carry an all-in policy that covers your permanent fixtures such as plumbing, wiring, and cabinets.
Of course, you should always check that your condo association is carrying adequate coverage. Request a copy of the policy so you can understand exactly what you need to cover on your own.
What Do You Need to Cover?
The short answer is that you should have coverage for anything your condo association doesn’t cover. Here’s what that means.
Damage to Your Unit
If your building is struck by a storm or has a fire, you might need to replace carpeting, repaint walls, replace appliances, or repair cabinets. Your building policy may never cover these items, or it may not include the cost of upgrades and refurbishments you’ve made over the original fixtures.
Destruction, damage, or theft of your personal property is almost always your sole responsibility. That includes your furniture, clothing, and electronics. Personal property coverage is usually sold in fixed limits, so make sure you select a limit that’s at least equal to the value of your personal property.
Your condo association typically carries liability insurance for injuries to guests in common areas, but you should have your own liability protection in case someone gets hurt inside of your condo. Your liability coverage will also usually cover incidents outside of your home, such as your children hurting someone while playing or your dog biting someone.
If you need to move out of your condo during repairs, adding this coverage will cover the cost of a hotel, additional food expenses, and other expenses depending on the type of coverage you choose. Similarly, if your condo is destroyed, you’ll have coverage for your additional expenses while finding a new permanent home.
As with other major expenses, your condo association can impose an assessment if damage the condo association is responsible for repairing exceeds the association’s condo insurance policy or isn’t covered by insurance. If you add loss assessment coverage, the insurance company will pay your assessments due to covered losses. This coverage is especially important if your condo association regularly uses assessments instead of maintaining sufficient reserve funds.
Earthquakes and Floods
Most condo insurance policies exclude earthquakes and floods as standard coverages. If you live in an area where there is a risk of either earthquakes or floods, you’ll need to add these coverages. This may be through an add-on option or a separate policy.
How Much Coverage Do You Need?
Each portion of a condo insurance policy may have its limit and deductibles. Some coverages are either full coverage or no coverage depending on if you select them. Others have dollar limits. There may also be dollar limits on specific items or types of claims under the main limits. When you choose limits, select limits that are high enough to cover the value of your items or potential repair costs. If you have a healthy amount of money in savings, you may choose to reduce your insurance costs by selecting lower limits or higher deductibles and self-insuring for that amount.
How Much Does Condo Insurance Cost?
Like all insurance, condo insurance varies based on where you are and how much coverage you need. Because the condo association carries coverage for the building, the typical cost for condo insurance is much closer to renter’s insurance than homeowner’s insurance.
What if You Rent Out Your Condo?
Renting out your condo may not be covered by a personal condo insurance policy since your policy might consider it an excluded commercial activity. Check your policy and look into landlord insurance (for long-term rentals) or commercial insurance (for short-term rentals). Also, make sure that your building’s main policy will still cover you and that you won’t be violating any bylaws that could potentially lead to the insurance company denying your claim.
What if You Live in Your Condo Part-Time?
If you leave your condo for 30 days or longer, your condo insurance may have a clause that certain claims won’t be covered. The reason is that you wouldn’t be around to prevent or mitigate a potential issue. If you don’t live in your condo the entire year or travel extensively, you may need to add vacant condo insurance to have full coverage while you’re away.
Is Condo Insurance Mandatory?
Your condo association or mortgage lender may require you to carry a certain amount of insurance. Otherwise, condo insurance generally isn’t mandatory, but not buying it may create a large financial risk.
To learn more about condo insurance or to request a quote for your situation, talk to Feldbruegge Insurance in Abbotsford, WI. We help local condo owners, and potential buyers find the right insurance and get quotes from multiple condo insurance companies at the same time. Contact us now or schedule an appointment to get started.