Condo Insurance: All You need to Know
Condos are a great place for homeowners to live. However, you still need to be aware of your condo insurance policy, because it can cover many of the things that you’re not necessarily expecting. It’s important to understand the ins and outs of your condo insurance policy before you sign a lease or purchase agreement.
Why to Purchase a Condo Insurance?
Here are some of the reasons that you must consider if you have a condo:
- Condo insurance protects your condo against fire, theft, vandalism, and other disasters.
- The policy covers the cost of repairing or replacing damaged or stolen property, as well as losses due to earthquake and hurricane damage.
- It also includes liability protection if you are sued for damages in your unit or on the common areas.
If you own a condo, it is wise to get a condo insurance policy. You can get a condo insurance policy from your homeowner’s insurance company or from a condo association. In some states, a condominium association is required to have a policy for its members. Condo insurance policies vary in price and coverage, so you should shop around to find a policy that best fits your needs.
Benefits & Coverage of Condo Insurance:
Condo insurance benefits are a part of the condo association’s policy that all owners must pay for. These include:
• Loss of Rents (when a fire or other event causes the building to be unrentable)
• Loss of Contents (when a fire or other event causes damage to items in the building)
• Loss of Landscaping and Improvements (if the property is damaged by a covered cause, the condo association may have to pay to repair the landscaping or improvements)
• Loss of Property (the condo association can cover certain costs related to the replacement of the building, such as the cost of removing the existing building and constructing a new one)
• Loss of Utilities (if a fire or other covered cause causes damage to the building’s electrical, plumbing, heating, cooling, or other utilities, the condo association can cover those costs)
• Loss of Personal Property (if a covered cause damages personal property belonging to the owner of the unit, the condo association may have to pay for the replacement of that property)
• Loss of Rental Income (if the condo association has to make repairs to the property that affect its rental value, the condo association may be required to pay the owner for the lost rental income)
• Legal Expenses (if the condo association is sued for damages caused by a covered cause, the condo association may have to pay for the legal expenses of the owner)
• Loss of Business Income (if a covered cause causes a fire or other covered event that results in damage to the building and the condo association has to close the building, the condo association can be required to pay the owner for any lost business income)
• Loss of Equity (if a covered cause causes a fire or other covered event that causes damage to the building and the condo association has to sell the building, the condo association may have to pay the owner for the difference between the fair market value of the building and the amount the condo association paid to purchase it)
• Loss of Life and Health Insurance (if a covered cause causes damage to the building and the condo association has to remove the damaged property from the building and replace it with new property, the condo association may have to pay the owner for the replacement of the new property)
• Loss of Liability Insurance (if the condo association has to pay for repairs that are the responsibility of an individual owner, the condo association may have to pay the owner for any additional liability insurance that is needed to cover the repairs)
• Condo Board Fees (if the condo association has to pay the condo board for the repair of the building, the condo association may have to pay the condo board for the condo association’s share of the board fees for the repair period)
• Other Expenses (if a covered cause causes damage to the building or its contents, the condo association may have to pay for the cost of cleaning the building or paying for repairs to the building or contents)
• Deductible (the condo association may be required to pay a certain amount before the condo association pays the rest of the condo insurance benefits)
• Premium (the condo association may be required to pay a certain amount of the condo insurance premium)
Condominium insurance benefits are typically paid in monthly installments. Each benefit has a different due date. For example, a loss of contents claim is usually paid when the building is repaired and ready for occupancy. A loss of rental income claim is usually paid when the building is re-rented. The amount that the condo association pays varies depending on the size and value of the building, the severity of the loss, and the number of months of coverage under the policy.
Condominium Insurance FAQs:
Q: When does my condominium insurance policy start?
If you bought your condo before January 1, 2010, your condo insurance policy is still active until January 1. The policy has a 30 day grace period during which time you can renew it. If you don’t renew the policy, you will not be covered for any claims that happen between January 1, 2015 and January 1.
After January 1, 2016, your condo insurance policy will be void unless it is renewed. Your policy must be renewed no later than 90 days prior to expiration.
Q: What if I have a claim under my policy and the condo association tells me that they will pay my claim?
If you have a claim under your policy, you are required to contact the condo association’s insurance agent or broker. Only the association’s agent or broker has the authority to settle claims. You must tell the condo association’s agent or broker of the amount of the claim. The agent or broker is also responsible for submitting all of the paperwork associated with the claim. The association’s agent or broker is also responsible for collecting the money to pay the claim.
Q: How does condominium insurance differ from insurance for other structures?
A: Condominium insurance is property insurance that is designed to cover the specific risks associated with condominiums. It typically includes liability insurance, but it can also include many other types of insurance, including business insurance, personal property insurance, and even life insurance and health insurance. In addition to insuring a building’s contents, condominium insurance may also provide coverage for a building’s structural components such as walls, floors, and roofs.
Q: Do I need to carry insurance on my condo’s contents?
A: You should have contents insurance on your building. Contents insurance covers the building and its contents. The contents are anything inside the building that you own, such as furniture, appliances, clothing, electronics, artwork, and any other personal items. If someone accidentally damages or steals the contents, the condo association would be responsible for paying for the replacement of the contents.
Q: Is there a deductible for condominium insurance?
Most condo insurance policies have a deductible that is set by the insurance company. The deductible is an amount that the condo association will have to pay for claims before the condo association is reimbursed by the insurance company.