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As a condo owner, you’re generally covered by two types of insurance: condo association insurance (known as a master policy or HOA insurance), and condo insurance for your individual unit (known as an HO-6 policy).
The building’s master policy insures the exterior of the building and covers its common areas up to a specified limit. If a guest is accidentally injured in a common area, the shared policy may also cover liability expenses related to the injury.
Meanwhile, your condo insurance protects everything inside your condo, including coverage for your personal possessions and dwelling coverage for the structure of your unit. Your condo insurance should also include “loss assessment” coverage to cover your portion of damages to building common areas.
Your condo insurance coverage needs are directly impacted by what’s already insured by your homeowners association (HOA). So you’ll want to be sure that your condo insurance coverage essentially picks up where the master policy leaves off.
IN THIS ARTICLE
Regardless of how lean or expansive your HOA insurance is, you can expect just about every policy to cover:
The full coverage your condo association provides depends on the policy type:
A bare walls-in policy covers just the structure of your condominium, so everything behind the walls, like the drywall, insulations, framing, wiring, and plumbing are covered.
An all-in policy covers everything that a bare walls-in policy covers, but includes coverage for condo fixtures, like your countertops, floors, and built-in appliances like a dishwasher or refrigerator.
Personal belongings that you can take to and from the condo aren’t covered. And you’re typically not covered for any renovations you made after you moved in, so you’ll need supplemental dwelling coverage in your condo policy.
A standard condo policy covers many of the same perils as your standard homeowners insurance policy, including fire, bad weather, and theft and vandalism; also like homeowners insurance, condo insurance doesn’t offer coverage for flooding or earthquakes – for that, you need to purchase separate flood or earthquake coverage.
In terms of what makes up your condominium insurance policy, you can expect every policy to offer coverage for the following:
The extent of your dwelling coverage depends on your condo association policy and whether they have all-in or bare walls-in coverage.
If it's walls-in, you’ll need replacement cost coverage for the entire interior structure of the condo – the floors, cabinets, carpets, lights, inner-walls, built-in appliances, and pretty much everything that came with the condo when you moved in.
For all-in policies, the interior structure of your condominium will have coverage, but these policies generally don’t cover renovations or any structural improvements you made. If you renovate, you’ll need replacement cost additions and alterations coverage to account for the increased rebuild cost.
If you own any other structures that aren’t connected to your condo, like a storage shed or garage, that only you use and aren’t property of the condo association, then you’ll need the structures insured with other structures coverage.
Personal property coverage is a core part of your condo insurance policy, covering your clothing, appliances, furniture, electronics if they’re damaged, stolen, or destroyed by a covered peril.
Condo insurance will replace any damaged or stolen items up to a certain limit. Certain types of property, like jewelry and expensive art, have sublimits and limited coverage. To increase sublimits for expensive or rare valuables and broaden your coverage terms, you’ll need to add a scheduled property endorsement to your condo policy.
Condo liability coverage protects you in the event that someone is accidentally injured in your condo and takes legal action. Lawsuits and hospital bills can add up, so you’ll want to make sure you have enough of a personal liability cushion for a worst-case scenario accident.
If you want more personal liability coverage than what’s offered by your insurance company, you can get a personal umbrella policy to increase your liability limits.
Medical payments coverage reimburses you for guest medical expenses if their injury happened in your condo, regardless of if you’re legally responsible or not. Coverage amounts are typically anywhere from $1,000 to $5,000.
Your additional living expenses, or loss-of-use coverage, pays for your living expenses if your condo is damaged by a covered hazard and made uninhabitable. If you’re forced to relocate, loss-of-use coverage may pay for your hotel or temporary living expenses while you look for something permanent.
Loss assessment coverage: Reimburses you for your share of an accident or damage to building common areas and is charged to all condo owners. For example, if the lobby was spray-painted with graffiti, and the damage didn’t reach your building’s master policy deductible, the onus would be on you and condo owners to either pay for its repair with loss assessment coverage or out-of-pocket expenses. If unit owners are responsible for paying the master policy deductible for damage to shared spaces, your loss assessment coverage may also cover your portion of the deductible.
Water backup coverage: Insures your property against water damage that results from sewer or drain backups. This type of water damage typically isn’t covered by your building’s master policy, your condo policy, or flood insurance.
Scheduled property endorsement: Additional coverage for expensive jewelry and keepsakes.
Putting a price on condo insurance is a little more complicated than standard homeowners insurance because the amount of condo coverage you need depends on the extent of your HOA’s existing policy.
According to the III, the average cost of condo insurance nationwide is usually in the $300 to $400 dollar range, except for Florida, where average premiums veer north of $1,000, so it varies a little bit.
For the sake of this exercise, we provided a couple of Policygenius sample quotes from two leading home insurance companies for a bare walls-in master policy, meaning the condo owner is responsible for dwelling coverage, personal property coverage, liability coverage, and whatever endorsements or add-ons they made to their policy.
|Company A||Company B|
|Personal property coverage||$50,000||$50,000|
|Loss of use coverage||$25,000||$20,000|
|Medical payments coverage||$5,000||$5,000|
|Loss assessment coverage||$24,000||$25,000|
What’s the takeaway here? That condo insurance really isn’t that expensive any way you slice it. Company A’s policy had $1,000,000 in liability coverage – on a bare walls-in master policy, no less, and the annual premium was still only $520. That’s a far cry from homeowners policies, which can enter into the thousands.
The main caveat with condo insurance is that it isn’t as straightforward as homeowners insurance. Worry not though, your lender will ideally be up to speed about your association’s master policy, as there’s a good chance they’ve lended to other owners in your building. As you go through the borrowing process, your lender will help steer you toward what coverage you need before closing.
In some condo associations, the HOA owner is responsible for paying the master policy deductible. In others, individual condo owners are responsible, and master policy deductibles have a tendency to be high.
According to the Insurance Information Institute (III), building deductibles of over $10,000 are not uncommon, and they’re even known to climb up into the $50,000 range. In some condo associations, the deductible amounts are assessed depending on who was impacted by the property damage.
For example, if the building lobby incurred fire damage and the building deductible was $25,000, the deductible would be divvied up amongst every condo owner in in a shared-deductible building. Condo owners’ portion of common area damage deductibles are typically covered by loss assessment coverage. If you don’t have loss assessment coverage, you’ll have to pay your deductible portion out of pocket.
However, if your kitchen catches on fire and your unit incurs $50,000 in damages with the same policy deductible, you’re responsible as the condo owner to pay the entire $25,000 deductible since the damage only involves your unit.
If you’re solely responsible for the master policy deductible and it’s super high, ask your insurance company if there’s any endorsements or coverage you can get (akin to loss assessment coverage) that may be able to cover high building deductibles.
Looking for the best coverage at the lowest rates for your condo? Talk to a licensed expert at Policygenius, who can look through your master policy and make sure you have the right amount of coverage.
Pat Howard is an Insurance Editor at Policygenius in New York City, specializing in homeowners insurance. He has been featured on Property Casualty 360, MSN, and more. Pat has a B.A. in journalism from Michigan State University.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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