What Is Condominium Insurance?
Condominium insurance is a policy designed to protect condo owners from covered perils like hurricanes, theft, fires and other incidents. It’s deemed an HO6 policy and is meant to protect many things inside the four walls of your condo, which is why it’s also called a walls-in insurance policy.
What Does Condo Insurance Cover?
Loss Assessment Coverage
☘ This invaluable add-on option to a condo insurance policy protects condo owners from having to pay exponential assessments when the sum of money to repair or rebuild damages exceeds their homeowner association’s master policy limits.
Building Property Protection
☘ If the walls or interior of your condo are damaged or destroyed, building property protection can step in to pay for the repairs to the walls and many other built-in features, such as light fixtures, built-in bookcases, nooks and other items.
Personal Property Coverage
☘ If your personal belongings are damaged or destroyed by a covered peril, including a dim-witted miscue by the neighbors, personal property coverage can help to repair or replace those items, such as furniture, clothing, electronics and appliances.
☘ If a guest is injured in your unit or just outside your doorway and you’re found liable, personal liability can step in to help pay for any medical bills and legal expenses relating to the injury. But if a guest is injured on common property, loss assessment coverage may kick in.
☘ For minor injuries, guest medical coverage is designed to have your back. It typically kicks in when the incident results in $1,000 to $5,000 in medical bills and is oftentimes used in conjunction with the injured’s health insurance policy.
Loss of Use
☘ While we wish this never happens, if a covered peril causes damage or destruction so significant to your condo unit that it forces you to temporarily move out, loss of use coverage can help pay rent for an equivalent home, storage fees and many other unexpected expenses.
Consider Your Condo Association’s Coverage
Before deciding on a condominium insurance policy, you should always consult with the property manager and secure a copy of the HOA’s master policy. If the policy has low maximums (usually $1 million or less) on their master policy, that means residents could be on the hook for exponential fees.
If a hurricane sweeps in and causes $1.5 million worth of damage to the condo complex and the HOA master policy has a maximum of $1 million per claim, the remaining $500,000 would be the responsibility of the residents to pay and would be divided equally among them. If there are 40 units, each unit owner would be required to pay $12,500 out of their own pocket or risk foreclosure.
But loss assessment coverage is there for you in times like that. It’s designed to pay any special assessment handed down by your HOA up to your policy’s maximum. This inexpensive add-on could wind up saving you thousands of dollars!
Is Condo Insurance Required?
Condo insurance isn’t technically required by law, but it will likely be required by your lender if you still owe a balance on your mortgage. Additionally, some condo complexes reserve the right to require condo owners to maintain adequate coverage while they own a property there.
Do I Need Condo Insurance?
While condo insurance isn’t required by law, you should always keep a policy with adequate maximums to ensure your family, belongings and financial wellbeing are all safe and sound — even if you own your unit outright.
You never know when a disaster may strike, especially since your unit may be attached to up to eight other units on all corners. When you do need to use your condo insurance, you’ll be glad you have it!
How Much Condo Insurance Do I Need?
The amount of condo insurance each owner needs is strictly up to their variables. It depends solely on how much value you have in possessions, what your HOA’s master policy maximums are, how much liability coverage would make you feel safe and how long you may be out of your condo if it were destroyed.
To determine how much condo insurance you need, you’ll need to factor all the above into your equation and figure out the exact dollar amounts that would give you adequate coverage and peace of mind.
How Much Is Condo Insurance?
The average cost of condo insurance fluctuates state by state, but it’s typically around $400 per year. That’s extremely affordable, especially when you consider how much protection you get. Talk about bang for your buck.
Your cost of condo insurance will be determined by which state you live in, how expensive your condo is and many other factors like coverage maximums.