There is constant debate in the insurance industry on how best to insure condos. Here are 3 important things to consider when insuring your condo.
1. What am I responsible for and how much does that cost?
To determine what you’re responsible for, it’s best to dig into the association master policy (declaration and bylaws) to see exactly what your obligation is as a unit owner and what’s covered by the condo association through their insurance policy for covered buildings including your unit. This will be key in determining the amount of coverage needed for the dwelling itself. Most condo insurance policies will define what makes up your dwelling coverage based on your ownership of the condo including its fixtures, improvements, and alterations, as well as property you are required to insure based on your condo association master policy. Condo association master policies can vary as to what your insurance responsibility is for your unit. Some master policies will provide insurance coverage for the entire unit including all alterations, appliances, fixtures, and improvements; some will provide coverage for unfinished walls out and subfloors; some cover alterations, fixtures, and improvements original to the units; some may only provide coverage for the exterior of the buildings. There may also be questions about whether your policy or the condo association insurance policy provides coverage for plumbing, electrical, HVAC, windows, doors, patios, decks, and other structures.
In addition to what is outlined in the condo association master policy, every state has a condominium statute which can also determine insurance responsibility between you and the condo association for damage to your unit. Most condo insurance policies contain an Other Insurance and Service Agreement that states when both your policy and the condo association insurance policy cover the same items, the condo association policy is primary in providing insurance coverage except for the amount not covered by the association policy because of a deductible which can often times be quite large. Your policy will then be primary in providing coverage for the amount of the condo association policy deductible.
2. How much is the association deductible?
The condo association’s master policy will also typically require they obtain insurance coverage for common areas and limited common areas for shared buildings and spaces. In the event of a loss such as a fire, the association may assess all unit owners a portion of the loss costs to cover the policy’s deductible or other losses not covered by the condo association’s insurance policy. Most condo policies provide limited Loss Assessment coverage for these situations. It is important as a unit owner to determine what your proportionate responsibility may be toward your condo association’s insurance deductible for covered losses as well as assessments raised for covered losses outside the insurance policy. This could be a financial responsibility you would need to consider in addition to your own condo policy deductible should there be a loss handled by your condo association’s insurance policy.
3. How much personal property do I have?
First, it’s a good idea to make a list of the items in your condo or townhome. When evaluating your personal property items such as electronics, clothing, jewelry, furniture, and art, consider the individual value of your big ticket items first. Then, add in your smaller everyday items such as clothing and kitchenware. Valuing the smaller items as a bulk collection versus individually will give you an idea of how much coverage is needed.
There are many variables to insuring your condo, but with the help of your independent agent, you can make sure you’re assets are adequately covered!
The information above is of a general nature and your policy and coverages provided may differ from the examples provided. Please read your policy in its entirety to determine your actual coverage available.