What is Condo Insurance, and Why Do You Need It?
When protecting your investment, you want to ensure you get the proper coverage. Buying condo insurance is one of the most important ways to ensure that you’re covered if something goes wrong.
All-in or Bare-walls-in Coverage
If you plan to buy a condominium, you may wonder what insurance coverage you need. There are three types of property insurance. Each is designed to protect different parts of the building.
The first type, known as “bare walls,” covers the exterior and common areas of the building. The association typically purchases it. However, individual unit owners can also buy basic wall coverage.
The second type, “all in,” protects fixtures and installations within each unit. This coverage can include kitchen appliances, wiring, carpets, and other condo features. Also, it can consist of improvements made to the building.
Many condo bylaws refer to “all in” or “bare walls.” all in coverage can be bought as an individual policy or by the condo association. You can use an insurance agent to find out what is covered.
Another type of insurance for condominiums is a master insurance policy. The condo association buys the master policy. Although it can be expensive, it can be beneficial.
If you want to buy a home in a condo complex, consider purchasing an HO-6 form. This form is specifically designed to cover the personal property of the condo owners.
You should also make sure that the master policy includes walls-in coverage. Most governing documents require this kind of coverage. However, it is essential to understand that this is not a one-size-fits-all policy. Therefore, it’s recommended that you calculate the value of your belongings and then determine how much coverage you need.
Loss Assessment Coverage
Loss assessment coverage is a common component of condominium insurance. This policy safeguards common areas, such as swimming pools and hallways, from damage and liability charges.
Consider adding more coverage if you have a high deductible. Typical insurance policies offer a minimal amount of loss assessment coverage. However, a good master policy can cover the cost of a large claim.
The loss assessment coverage available to you will depend on your risk appetite, the size of your condo complex, and other factors. Some policies reimburse up to a certain amount per day, while others are more generous and offer reimbursement for a single day.
Condo corporations can issue assessments for other reasons. For example, every unit owner will be responsible if there is widespread water leakage. Another example is attractive nuisances, which will likely require a higher limit.
The best way to understand loss assessment coverage is to look at the HOA master policy. It may have different coverage limits than your policy, but it’s worth checking.
Besides protecting common areas, loss assessment coverage can also be helpful if you have a high deductible. This coverage pays for part of the cost of a loss assessment, which is passed on to the individual condo owners.
Water Backup Coverage
Water backup coverage is an optional home insurance policy that pays for the cleanup of water damage. If a sump pump fails or a sewer or drain backup occurs, this coverage can help you get back on your feet.
Sewer and drain backups can be caused by several factors, including tree roots that tangle with the pipes, main sanitary blockages, and heavy rain that overwhelms the drainage system. It’s essential to have this type of coverage, especially if you live in a city with a sanitary main.
The cost of repairing a water backup can be high. Some insurers offer an additional deductible for this coverage, but the standard deductible is $500 to $1,000. It would help if you determined how much water backup coverage you need before you purchase it.
A good homeowner insurance policy will have several features, but a water backup endorsement is one of the most popular. This coverage is a relatively low-cost extra that protects homeowners from the financial consequences of water damage.
To qualify for the most impressive water backup coverage, you should know what it can and can’t cover. For example, flood insurance is excellent, but flooding is not covered under water backup insurance. And even though water backup is a fairly common problem, it doesn’t usually pay for replacements of your belongings.
Personal Liability Protection
Consider buying a condo insurance policy that provides personal liability protection if you own a condo. This policy can help you if you are held liable for property damage, bodily injury, or other lawsuits.
Most homeowners and condominium owners’ policies will include personal liability coverage. Understanding the policy’s limits and exclusions is essential before choosing a policy. Also, speak with an independent agent or insurance broker to clearly understand your options.
Personal liability coverage protects the assets of a homeowner, condominium owner, or co-op owner if they are liable for someone else’s injuries or damages. Some policies reimburse up to a certain amount each day, while others allow a maximum limit per claim. The range will pay for settlements and legal fees.
In addition to the coverage provided by a homeowners’ or condominium association policy, you may also need to purchase additional coverage. For example, if you own a car, it is essential to have liability coverage for that as well.
Condo and homeowners’ insurance typically do not cover damage caused by flooding or sinkholes. However, you can purchase a personal excess policy to add extra liability coverage.
Personal liability coverage is an excellent way to protect your financial assets, as it helps to pay for a lawsuit if you are found liable. Depending on the policy, you may be able to receive up to $1,000 for each person’s medical payments. Medical expenses include ER visits, imaging, physical therapy, and treatment.