Owning a condo is a great option for people from all walks of life. Empty nesters and retirees have less house to take care of. Newlyweds can have a nice home before they start a family. Small families can have the space they need instead of owning too much home. And if you hate doing yard work or worrying about big maintenance jobs like roof replacement, condo ownership is probably perfect for you.
One thing that doesn’t change whether you own a single family home or a condo — the need for insurance. But condo insurance isn’t exactly like other property insurance. Here are four things you need to know about it.
You Don’t Insure the Building
Condo buildings and communities are run by either a condo association (COA) or a homeowners association (HOA). These associations purchase their own insurance coverage, usually referred to as a Master Policy. This insures the building(s) and common areas under the purview of the association. It also pays for bodily harm and property damage suffered by third parties that occur outside an owner’s unit, on the grounds, and in other common areas.
Your Coverage Insures the Inside of Your Unit
In general, condo insurance covers damage to the interior of your unit but the exact type of coverage depends on the type of policy you have. This is dictated, in large part, by the COA/HOA master policy.
All-in: The master policy covers anything originally built inside your unit — cabinets, fixtures, etc. You’re responsible for your personal belongings and for any changes you make that replace original fixtures.
Bare walls: Your condo insurance covers everything to the bare walls. The master policy covers the building, as well as the walls, floor, and ceiling.
Wall studs in: As the condo owners, you’re responsible for everything from the studs into your condo, including the drywall. The master policy covers only the bare structure.
Condo Insurance Covers Plenty of Situations
A lot of what your condo insurance covers will be familiar if you’ve ever had a homeowners insurance policy.
- Damage to the interior of the unit (based on the type of policy — see above)
- Stolen property
- Liability for bodily harm or physical damage to a guest in your condo
- Living expenses if your condo becomes unlivable after a covered event
- Loss assessment
What is a loss assessment?
Your association’s master policy will have a limit just like any other insurance coverage. If a covered event exceeds the policy limits of the COA/HOA insurance, unit owners will be expected to help pay the difference. This cost is a loss assessment. Some condo insurance policies include coverage for loss assessments which may pay all or part of your assessment.
Condo Insurance Doesn’t Cover Everything
Like all insurance policies, condo insurance excludes certain events, some of which can be guarded against with a separate policy.
- Earthquakes
- Flood
- Wear and tear
- Damage from vermin like bugs, rodents, or birds
- Damage from underground water like a sewer back up
When you purchase your condo insurance policy, make sure you know exactly what is and isn’t covered. Ask if there are additional riders, endorsements, or policies you can purchase to provide more protection from hazards.
Whether you’re buying your first condo or you haven’t updated your current condo insurance in years, contact Charlotte Insurance today. We can help you find the policy that offers the best protection and coverage.