Condo Insurance Coverage
Condominium insurance coverage, as with any insurance coverage, provides peace of mind in the event the unexpected occurs. However, condo insurance coverage is different from coverage needed by a homeowner or a renter.
Most mortgage lenders require insurance coverage that includes liability and personal property coverage. In addition to having coverage on personal possessions, coverage is needed on built-in structures such as carpeting, shelving units, cabinets and appliances.
Condo association coverage
When considering condo insurance coverage, first look at the insurance coverage provided by the condominium association. Most associations charge condo owners a monthly association fee, part of which goes toward an insurance policy that covers common areas in the complex, such as game rooms, the pool or outdoor recreation areas. The association agreement should specify what areas are covered by the complex, and what level of coverage is provided.
Condo owners also need to be aware that the insurance policy provided by the association will generally have a deductible. In the event a claim is made by the association, the amount of the deductible will be divided equally among all of the condo owners.
Types of association coverage
The type of coverage provided by the condominium association will help determine what kind of condo insurance coverage the unit owner needs to have.
The condominium association will have one of two types of insurance: Bare Walls In or All In. Bare Walls In policies do not provide coverage for countertops, flooring, carpeting, light fixtures, or kitchen and bathroom fixtures. All In policies cover these items, and also cover any improvements or alterations a condo owner may make, up to a certain amount.
When considering condo insurance coverage, the unit owner has the option to include coverage for accidental damage done while making any improvements or additions to the condo, over and above the amount covered by the association’s policy.
Personal property coverage
Routine items are included in the personal property coverage. However, when determining the level of coverage needed, consider whether you have other valuables, such as antiques or art work, that may need additional coverage.
Find out whether the condo insurance coverage you are considering is based on replacement value or actual value. Replacement value is the amount it would cost to replace your belongings with items of similar quality at the current price. Cash-value replacement coverage reimburses the condo owner the amount the belongings are currently worth. Cash-value coverage takes into account the amount the item may have depreciated since it was first purchased.
Determining how much coverage is needed
One way to determine how much condo insurance coverage is needed is to estimate the market value of the unit, and divide by half. Another way is to find out what amount neighbors have spent on recent replacement of items such as flooring, fixtures or countertops.
Other considerations
Other areas to consider when purchasing insurance coverage include what level of coverage is provided in the event of damage caused by a sewer or drain back-up, what insurance requirements does the condo association require from its members, and what, if any, type of coverage does the condo association provide in the event other condo owners do not have adequate coverage.