Condo Insurance

When it comes to home insurance, Condo Insurance is a different ball game altogether. A condominiums owner, as opposed to a homeowner, does not own the actual structure of the building. Condo owners’ insurance needs are therefore different. So, while building's insurance policy covers the external and the surroundings of the home, the unit owners need to purchase a personal home insurance policy (type HO-6).

That is because the building's policy doesn't protect their personal belongings. It may not even offer liability coverage within their homes. For instance, if the roof of your condo gets damaged, and water leaks into your unit, the building’s master policy would cover the roof repair but not individual unit repairs to things like the ceiling, walls, carpets or furniture in your unit.

So what do you do? Take cover for Condos!

How does it work?

Ascertain that building association policy is adequate: The Unit owners need to ascertain that the building association policy is adequate, to cover replacement costs if the entire building is destroyed. So first, check what's covered in your building's master policy by reading your association byelaws or property lease.

The master insurance policy generally covers the common areas in the building, like the roof, basement, elevator and walkways. Some condo owners also have 'bare walls coverage', which means that the building pays for everything from the inside walls. However, this depends on what you own: the four walls of the condo, or just the airspace in between.

Itemize your possessions: Make a list, and use that video camera to videotape the contents of your home. Store it with a friend or relative or in a bank safe deposit box. The inventory is necessary because your HO-6 policy must have enough coverage to replace your belongings if they are all destroyed.

The average annual premium on a HO-6 policy is between $250 and $350 in certain states. You may also need to buy individual insurance policies, to insure valuables, like expensive jewellery or artwork.

Besides structural damage to the outside of your property and the destruction of your belongings, the last issue you need to consider is liability coverage. The master policy will have liability insurance only for shared spaces, like sidewalks, gutters and walkways.

Your HO-6 policy will also cover your liabilities. You will thus be covered for all accidents that may occur within the space that you own. For instance if someone falls and injures himself in your apartment, your policy would provide liability coverage.

Know the fine print

Make sure you are aware of the deductible on your building's policy. For all damages to a shared space, every unit owner will be asked to contribute money to reach that deductible. If the damages are pertinent to your property and if they are not covered by your policy, then you may have to pay for those yourself.

Ensure that your policy covers the difference between your deductible and the condo policy's deductible.

Finally, make sure your policy has built-in coverage for unit assessments. These appraisals are amounts that the individual unit owners have to pay for repairs on shared property. But HO-6 policies cover unit assessments -- if they result from damage to the property due to "covered perils".

So next time the wind blows away the roof of your condo, you can rest in the knowledge that your HO6 policy will take care of these unit assessments.

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