Condo Owner Insurance Tips

If you are in the market for a condominium unit or townhome, insurance is probably one of your primary concerns. Just like homeowner's insurance, condo insurance coverage is designed to protect a condominium owner from property damage and from liability. However, the insurance needs for a condo are different from those for a single-family house.

According to Investopedia, it is easiest to think of a condo as an apartment that is owned rather than rented. You have access to common areas, such as walkways, gardens, playgrounds, and trails, but your ownership is confined to the interior of the unit you have purchased. For this reason, your insurance requirements are limited to that interior space.

The rest of the condo complex is insured under a master policy held by the condominium association. In other words, you're paying indirectly for that condo insurance coverage via the fees you pay to the association, but your personal policy doesn't need to cover areas outside your unit.

Property Damage Condo Insurance

The primary type of condo insurance coverage you need is property damage, which covers certain perils that might cause damage to your condominium. A fire, for example, could destroy the entire interior of your unit, so insurance is necessary. The same goes for lightning strikes or hurricane damage.

Keep in mind, however, that property damage condo insurance coverage will also exclude certain perils for which you need to buy additional insurance. Flood water damage, for example, is usually not covered under a basic property damage policy.

Personal Liability

Your litigious Aunt Mary comes for a visit, slips on your kitchen floor, and breaks her leg. If she sues you for negligence, personal liability condo insurance will cover any damages that must be paid out as well as your legal defense until the coverage is exhausted. Most of us don't have litigious Aunt Marys, but personal liability insurance is important to protect yourself from claims made against you.

Contents Coverage

Property damage condo insurance covers certain types of contents in your home, but a contents coverage policy is designed to protect the rest. It might include electronics, jewelry, collectibles and anything else of significant value, some of which should be scheduled and appraised. There are limits to contents coverage on your condo insurance policy, so make sure you purchase additional coverage for any valuable items that exceed these limits.

Loss of Use

If a hurricane comes through your town and your condo is destroyed in the storm, you might have to find somewhere else to live until the damage can be repaired. Situations like these are what loss of use condo insurance coverage is for. It can also pay for things like property storage.

Choosing Condo Insurance Coverage

In order to select the appropriate level of condo insurance coverage, you need to know what is covered by the master policy held by the condominium association. It is also important to know about perils that are particularly common in your area, such as earthquakes in California or tornadoes in Kansas.

There might be certain types of condo insurance coverage required by the financing company through which you've obtained a mortgage. Make sure you are in compliance with these requirements to avoid any problems with your home.