In many ways, buying a condominium offers fewer headaches than owning a single-family home: you don’t need to take care of yard work or snow removal, nor do you have to handle major maintenance issues on the building itself.
However, not everything about condo living is easier. In particular, figuring out how to adequately insure your home is a much more complicated prospect when you own a condominium.
Here’s what you need to know about homeowner’s insurance for condos:
Know the Master Policy
Part of the confusion with condo insurance comes from the fact that the building itself is covered by the condo association’s master policy. These policies are paid for by your association dues, and they cover any part of the complex that’s owned in common — from building exteriors and hallways to common rooms or pool areas.
The master policy doesn’t cover any individual unit, however, since the owner of that unit is expected to have their own insurance for the contents.
How much insurance you need for that depends on what type of master policy your association has. There are two types: bare walls-in, which only covers the structural aspects of any particular condominium unit, and all-in, which covers the structure and any fixtures that come standard in the condo, like countertops and light fixtures.
If your association master policy is a bare walls-in variety, that means you’ll need more coverage, since you’re responsible for everything within your unit other than the bare walls and floor.
Know the Association Deductible
Another piece of the puzzle is how high the master policy deductible is. If there’s an insurance claim through the master policy, the condo residents are expected to equally share in the cost of the deductible for that claim.
Oftentimes, these deductibles can be quite high — between $10,000 and $50,000. Spread across the total number of owners in the building, that becomes much more manageable, but it’s still a cost you’ll have to factor in. You can add a deductible assessment coverage rider to your condo insurance to provide you with enough coverage to handle your portion of the deductible.
In addition, it’s important to understand the bylaws of your condo association when it comes to that deductible. Some condo associations will make individual owners responsible for the entire master policy deductible if the loss began in their unit — for instance, if a pipe bursts in your apartment that then floods the building.
Know the Value of Your Possessions
One aspect of condo insurance that’s similar to homeowner’s insurance is the importance of adequately insuring your belongings. It’s helpful to have your valuable possessions specifically itemized and appraised so that you can know exactly how much coverage you need for the contents of your condo.
In addition, don’t forget to consider the costs of any upgrades you’ve made to your condo. This includes installation of carpet/flooring, cabinetry, countertops, etc. Even if your master policy is an all-in policy, anything that you do to improve your home is on you to insure.
The Bottom Line
The thick sheaf of association documents you receive when you buy a condo is something you really need to hold onto and study. This will help you determine what your insurance needs are. When you meet with your insurance agent, bring along the association documents so that you can make sure you’re getting all of your homeowner’s insurance needs met.
For those of you living in condos, what type of insurance do you have?