- What Is Condo Insurance?
- What Does Condo Insurance Cover?
- How Does Condo Insurance Work?
- Why Is Condo Insurance Necessary?
- Is Condominium Insurance Tax Deductible?
- How to Buy Condo Insurance
- Does Condo Insurance Cover Theft?
- Does Condo Insurance Cover Hurricane Damage?
- Does Condo Insurance Cover Special Assessments?
- Does Condo Insurance Cover Mold?
- Does Condo Insurance Cover Appliances?
- How Much Condo Insurance Do I Need?
What Is Condo Insurance?
Condo insurance, also known as an HO-6 policy, differs from renters insurance and regular homeowners insurance. If you own a condo, you’ll need to insure only a portion of the building in which you live and your personal property. Your condo owners' association will have an association master policy, which covers the building(s) and the common elements of your condo complex.
It’s good to become familiar with the type of coverage your association master policy provides so you can purchase the right coverage for your unit. Association master policies typically fall into one of the three following categories:
- Bare walls coverage covers the basic elements of a building's structure (walls, roof, floors, elevators, etc.). It requires the unit owners to obtain coverage for interior features like countertops, bathroom and kitchen fixtures, flooring, appliances, carpet, cabinets, wall coverings, and other items within individual units. Owners might also need to purchase coverage for the interior walls of their units.
- Single entity coverage insures the basic structure and specific items within individual units, other than the owners' personal property. Improvements made at an owner's expense and builder-installed items like countertops, fixtures, carpeting, and so on are not covered.
- Modified single entity/all-in coverage protects fixtures, installations, or additions/improvements within the interior surfaces of individual units' perimeter walls, floors, and ceilings. Under these types of association master policies, unit owners have a more limited need for coverage.
Association master policies can vary even more. Find out what your condo’s association master policy does and does not cover before you buy condo insurance. With the help of an independent insurance agent, you can determine how much coverage you need for your personal property and any structural elements for which you need to purchase coverage.
What Does Condo Insurance Cover?
The basic elements of condo insurance coverage are as follows:
- Dwelling coverage: Covers damage to any parts of the unit itself (walls, fixtures, etc.) that the unit owner must cover according to the association master policy.
- Personal property coverage: Covers damage to the condo owner’s personal property, including furniture, clothing, artwork, electronics, and more.
- Loss of use coverage: Provides certain temporary living expenses (e.g., lodging, meals) if your unit is uninhabitable after a covered loss (e.g., after a fire).
- Liability coverage: Covers medical expenses, repairs, and legal fees if someone is injured in your unit or if you damage someone else's property.
The property coverage in a condo insurance policy covers your property when it is lost, damaged, or destroyed by certain covered perils. Condo insurance typically covers damage caused by:
- Fire and smoke
- Wind and Hail
- Theft
- Explosions
- Vandalism
- Lightning
- Burst pipe
Condo insurance won’t cover everything. For example, your condo insurance may help cover water damage caused by burst pipes, rain, and ice dams, but it may not cover sewer or drain backups or water damage caused by floods.
If you need sewer backup coverage, you likely can purchase a sewer backup endorsement to your condo insurance policy. And you can buy flood insurance from the National Flood Insurance Program (NFIP), administered by the federal government.
How Does Condo Insurance Work?
Your condo association’s master policy covers damage to your condo building, grounds, and other external features. So, your personal condo policy needs to cover your personal possessions, appliances, and sometimes installed fixtures and other attached features in the unit. In the event of a covered loss, such as a burglary or fire, you'd need to file a claim with your insurance company and/or the condo association’s insurance company.
For example, if your condominium were burglarized, most likely you would file a claim with your insurance company. However, if the burglary involved breaking and entering that destroyed an external doorway or if the external security experienced a failure that made the burglary possible, the claim may involve both your insurance company and the condo association's insurance company. When in doubt, be sure to consult with your independent insurance agent.
Why Is Condo Insurance Necessary?
The condo association's coverage only covers the exterior of the condominium, and sometimes may cover certain built-in or permanent fixtures on the inside of your unit. For your condo's interior and your belongings, condo insurance covers potential losses, such as theft or damage from fire. You must also protect yourself from liability claims and lawsuits if someone gets injured in your condo or if you're responsible for damage to someone else's property.
Note that liability insurance often covers your responsibility for libel, slander, and other bodily injury claims. Because liability claims can lead to lawsuits, evaluating the amount of coverage you need to protect yourself financially is necessary.
For additional liability protection, many residents purchase umbrella insurance. An umbrella policy provides liability protection that exceeds the limit enforced by your underlying condo insurance. Coverage is typically available in increments of $1 million.
Is Condominium Insurance Tax-Deductible?
Condo insurance, as a rule, like homeowners insurance, cannot be deducted from your taxes. However, if you rent the condo out to another person, you may be able to deduct the cost of your condo or landlord insurance, at least as it applies to depreciation and wear and tear.
Also, if you operate a business out of your condo, you can typically deduct a portion of your condominium insurance from your taxes. If you're in need of protection for your home business, an independent insurance agent can help you find the right business insurance.
How to Buy Condo Insurance
Although there are several ways to buy insurance for your condo, your best bet is to work with an independent insurance agent. A local agent in your area can compare condo insurance rates from multiple insurance carriers and help you choose the best policy for your needs.
Additionally, your agent can provide consultation on various options and available condo insurance discounts. For example, you may be able to bundle your auto insurance and condo insurance for a multi-policy discount.
Does Condo Insurance Cover Theft?
Your condominium insurance covers theft or burglary if your policy includes personal property coverage. Depending on the details of your policy, you may even be covered for items that are stolen from your car.
However, be aware that certain items may be either excluded from coverage or have specified limits, and additional riders or endorsements may be required to get full coverage for them. This can apply to such things as jewelry, art, collectibles, and other valuable items.
To ensure all of your items are covered against theft or damage, take a full inventory of your personal possessions and estimate their value. Many condo owners are surprised to find out how much they have that's worth protecting. Be sure to compare the amount of coverage you have with your inventory. Also, by taking inventory of your items, you'll be well prepared to file a claim in the event of a loss.
Does Condo Insurance Cover Hurricane Damage?
If you have condo insurance, you're covered for damage to your possessions and the interior of your condo from certain elements of major storms such as hurricanes, tornadoes, and windstorms. However, damage caused by natural flooding, such as the heavy rainfall from hurricanes, is likely not covered. Flood insurance is a separate policy that covers flooding incidents from natural sources like heavy rainfall, hurricanes, tsunamis, melting snow, and more.
Damages to fixtures, plumbing, or wiring may or may not be covered under the condo association’s master policy, as some condo policies cover fixtures while others only cover bare walls. If the master policy is a “bare walls” policy, you may opt to get a personal condo insurance policy covering these items. It's always critical to understand the coverage your condo association carries so you can avoid coverage gaps.
Does Condo Insurance Cover Special Assessments?
Basic condo insurance does not typically cover special assessments. However, in some policies, special assessment coverage is included for “named perils.” For example, if a fire damaged your condominium, including common areas, the unit owners in the association may receive a special assessment notice to cover some of the costs of the repairs.
Depending on the specifics of your condo insurance policy, you may have some coverage that would help you cover your portion of the assessment. You can also separately purchase loss assessment insurance, which covers special assessments not contained within your condo's property documents.
Does Condo Insurance Cover Mold?
Most home and condo insurance companies specifically exclude mold from their policies. However, you still may be able to successfully file a claim with your condo insurance company under certain circumstances.
For example, say you go on vacation, and a pipe bursts while you're away. When you return, you find water and mold everywhere. In this scenario, your insurance company would likely cover mold remediation because it was caused by a covered peril. However, if the mold were due to a flood, it would not be covered unless you had a separate flood insurance policy.
Does Condo Insurance Cover Appliances?
Yes, appliances are typically covered under your condo insurance policy. Be sure to review the specifics of your policy and the limits on appliance coverage and update it as needed. For example, if you move into your condo and the original policy adequately covers your old appliances, but you choose to upgrade your stove and dishwasher a month later, it’s a good idea to make some adjustments to your policy.
How Much Condo Insurance Do I Need?
One of the first questions new condo owners ask is, “How much condo insurance should I get?” Basically, you can get a rough idea of how much condo insurance you need by performing an inventory of all your personal items and figuring out how much it would cost to replace your belongings after a burglary or fire. Certain valuable items may need special or additional coverage.
For example, assume you have $10,000 worth of jewelry, $20,000 worth of furniture, and another $20,000 worth of electronics, clothing items, and other personal items. You'd need to check if your total coverage limits are set high enough and if any single item in your personal property inventory exceeds the “per-item limit.” A diamond necklace that's worth $5,000 would not be fully covered by a policy with a per-item jewelry limit of $1,000, for example.
To find the most affordable coverage that matches your specific needs, connect with a local independent insurance agent.
Sources
https://www.insurance.com/average-condo-insurance-rates
