Condo owners are sometimes confused about condo insurance because they do not know what is covered by their own policy versus what is covered by the condo association’s insurance policy. To put it simply, the condo association buys insurance to cover the building and common areas, whereas condo owners buy insurance to protect the property inside their own unit and their personal liability.
There are five standard coverages on a condo policy:
Personal Property Coverage
As a condo owner, you are responsible for covering everything inside your condominium, such as your furniture, clothing, appliances, cabinetry, carpet, and other valuables. If you have expensive jewelry, fine art, or other collectibles, it’s important to schedule those items separately on a condo policy, just like you would on a homeowner policy.
Guest Medical Protection
If someone is accidentally hurt inside your condo, it is important to have adequate coverage to pay for medical expenses. I recommend that my clients carry $5000 of guest medical coverage on their condo and homeowner policies.
It’s important to have adequate liability coverage no matter what type of property you own. Since a condo owner shares walls with others, it’s even more important to have proper liability coverage in case another owner holds you liable for injury or damages to their property or unit.
Remember, liability coverage includes compensation for the injured party and the the cost of defending you in court–up to the limits of your policy. This coverage extends to members of your household for injury or damage caused on or off your premises. I recommend that my clients have at least $300,000 in liability coverage, but if you have significant assets, you should consider purchasing a personal umbrella policy to provide additional liability protection.
Additional Living Expenses
If your condo becomes uninhabitable due to a covered loss such as a fire or water leak, your condo policy provides coverage up to your policy limits for a hotel, rental property, and other reasonable expenses related to the loss for a certain period of time while your condo is being repaired.
Loss Assessment Coverage
If your condo association levies assessments against you as a result of certain losses to the common area of the condominium complex , your policy may pay a portion of your share of the assessment up to your policy limits.
The good news about condo insurance is that it is relatively inexpensive since your insurance company is only insuring the property within your individual unit and not the entire building, roof, and other structures on the complex.