What Is Condo Insurance? What Does Condo Insurance Cover?

What Is Condo Insurance

Do you own a condominium? Are you dependent on the condo association to insure the building and common areas? If yes, then it might be time to rethink your choices. The condo association’s master policy will not help if your belongings are stolen or destroyed in a fire. In such a situation, personal condo insurance, also known as HO-6 insurance, comes to the rescue. What is it all about? Let us find out!

 

Personal Condo Insurance: Definition

Simply put, condo insurance is a coverage that protects against losses and repair costs for a condominium unit. Condo insurance assures a robust safety net against theft, fire damage, water damage, vandalism, etc. Your condo association’s master policy does not cover certain items, such as furniture, electronics and other items.

Aslo read: Condominium Insurance 101: What It Is? What Does It Cover?

So, if someone steals damages your dining room set or vandalises a water pipe, a condo insurance policy can effectively reimburse you. Furthermore, one of the most interesting aspects of condo insurance is that it offers liability coverage in case your dog bites someone or a guest gets hurt in your home.

 

Condo Association’s Master Policy Insurance: Definition

Individuals living in a condo are covered under the condo association’s HOA policy. It covers the condo’s building, grounds, and other external features. The insurance is usually included in your HOA fees. The master insurance could either be an ‘all-in’ policy or a ‘bare-walls-in’ policy.

  • All-in

Also known as a single-unit policy, an all-in policy encompasses condo features, including attached appliances, wiring, plumbing, carpets, etc. In other words, the all-in policy includes everything in your condo that you do not own and you would leave behind if you moved places.

  • Bare-walls-in

It is a policy that does not cover anything within your walls, whether you own it or not. Thus, items like appliances like carpets and furniture are not covered, and elements like plumbing and electrical units may or may not be covered.

Whatever policy your condo’s master insurance covers, it is truly not enough. Moreover, if the insurance is bare-walls-in, additional insurance coverages for appliances and fixtures become indispensable.

 

What Does A Personal or Individual Condo Insurance Cover?

Individual condo insurance comprises several components, such as –

  • Personal Property

It includes the costs of the possessions inside your condo if they were to get damaged or destroyed. With personal property coverage, you can expect to get paid to replace furniture and other belongings if they are stolen or damaged by an event listed in your HO-6 policy. These events or ‘named perils’ include scenarios like wind, hail, fire, etc.

Also read: What is Business Property Insurance?

A standard condo policy often encompasses valuables, such as jewellery, electronics or artwork only up to a certain monetary limit. If you own very expensive items, extra coverage becomes necessary.

  • Personal Liability and Medical Payments

There are two parts of personal condo insurance that can help cover expenses if someone else is hurt inside your unit or if you accidentally damage someone else’s property. Personal liability insurance saves you from costly lawsuits like those when your dog bites someone at the park. To be eligible for this coverage, you must be found responsible for the property damage or injury.

Similarly, medical payment coverage usually has a lower threshold and helps pay the medical bills of a person hurt in your unit, irrespective of whoever’s fault it is!

  • Loss of Use

It includes the cost of living (ordering food from restaurants, hotel stays, etc), if you were to be displaced from your condo because of damages, like fire, hailstorm, etc.

  • Loss Assessment

If a common area in your condo is damaged, the condo association may perform a ‘loss assessment’ on every tenant in the condo. So, every person will be asked to pay a certain amount to pool in a specific amount to repair the damage. If your personal condo insurance covers loss assessment, then the money demanded for repair will also be covered.

 

Items Covered Under Individual Condo Insurance

Individual condo insurance covers anything and everything within your condo unit, which includes –

  • Appliances
  • Interior walls
  • Wiring and plumbing
  • Light fixtures
  • Furniture
  • Carpets
  • Countertops
  • All other possessions

Usually, the perils or scenarios covered include fire, theft, and storms, such as hurricanes, windstorms, earthquakes, tornadoes, etc.

 

What Is Not Covered In A Personal Condo Insurance?

The coverage of personal condo insurance depends on the provider. But, there are several common aspects that are beyond the scope of personal condo insurance. For instance, most condo insurance policies do not encompass mould removal, unless the mould is the consequence of a covered situation. So, mould culminating from natural causes will not be covered, but mould resulting from a burst pipe might be covered.

Likewise, flooding is not covered under personal condo insurance, as flood insurance is a separate policy. You need to make a different purchase if you want flood damage coverage for your condo. Furthermore, some condo insurances place limits on items like art, jewellery and valuables.

 

Do You Need Individual Condo Insurance?

Just like homeowners insurance, mortgage lenders also mandate you to purchase condo insurance. Opting for personal condo insurance serves as a way to protect the lender’s financial plan during the course of the loan. However, the coverage is also beneficial for you and serves as an excellent safety net.

Well, the answer to the question – do you need individual condo insurance – is quite simple. For most people, it is a firm yes. However, the challenge is deciding how much condo insurance you need.

Simply put, if you want full coverage, ensure that your policy covers the cost of all your possessions. To figure this out, simply estimate the value of the estimate and sprinkle some overestimate to ensure full coverage. Moreover, in recent times, we can observe a trend among mortgage lenders needing condo owners to carry at least 20 percent of the condo’s purchase in personal condo insurance. So, if you have purchased your condo unit for USD 100000, you will need a condo insurance coverage of USD 10000.

 

Wrapping It Up

So, there we have it, a crisp overview of condo insurance coverage – including the association’s master policy and individual condo coverage.