Want condo insurance coverage explained by professionals? You’ve come to the right place. Condo living can be ideal for people who prefer to live close to the hustle and bustle of an urban area or for those who don’t want the hassle of maintaining a house or its property. With that freedom come a few extra things to remember, one of which is the fact that condo insurance claims work differently from home insurance.
What Is condo insurance?
Similar to home insurance, condo insurance is designed to protect you from unexpected damage or loss resulting from:
- Fire damage.
- Water damage.
- Other insured perils.
Unlike home insurance, condo insurance works in conjunction with another insurance policy—the “master policy” purchased by your condo association.
In essence, you are only responsible for damage to your unit, as well as your belongings that aren’t covered under the master policy (contents insurance covers that). This means that condo insurance claims work differently from home insurance on some levels, but not too many.
What Is a master policy?
The master policy purchased by your condo association usually covers these basic elements:
- The building itself
- Common areas
- Other mechanical features of the building
It will also include liability coverage in the event someone is injured in the building. The coverage descriptions, exclusions and limits can be quite different between master policies, so every owner should have condo insurance coverage explained by their advisors, along with a copy of the condo agreement.
The fine print of condo insurance coverage explained
Much of a condo policy is similar to a home policy—there are only a handful of key differences, but its’ one of the home insurance terms you should know. For example, coverage for your personal belongings and valuable articles are exactly the same as a home policy. Similarly, the personal liability portion of the policy provides the same coverage as the home version. However, there are a few very important differences worth noting, which are outlined below.
Condo insurance property coverage only protects what is not covered by the master policy. For many master policies, this includes everything outward from the wall studs in your unit (but always read yours just to be sure!). That can affect the size of your claim and, by extension, your home insurance deductible.
In practical terms, this means the drywall, flooring, wiring, kitchen cabinets and everything else that originally came with your condo. Items such as windows and fireplaces could be covered by the master policy, but not necessarily—don’t get caught without coverage on those!
Make sure all of the property is covered by at least one of the policies. If you’re not sure, then you can have this aspect of your condo insurance coverage explained by your broker or a representative from your condo association.
Additions and alterations
This coverage protects all the renovations made to your unit. This could include things like:
- Hardwood or stone floors.
- Kitchen fixtures.
- Crown mouldings.
It’s essential that have enough additions and alterations coverage to replace all of the investments put into your condo, or else you’d need to pay for them all over again if they were damaged. Not ideal.
This coverage is unique to condo insurance. It protects unit owners from large building and common area repair bills that the master policy will not cover or may not have sufficient coverage to pay the entire amount.
For example: if the entire ventilation and heating system needed to be replaced due to a covered loss, then a individual condo unit couldn’t cover it alone (nor should they). The master policy may not have limits high enough to pay for the necessary work, either.
In this case, the condo association will assess a cost that each unit owner will need to pay in order to cover the expense for the building-wide repair. Loss assessment coverage will pay for your portion of this expense in that scenario to prevent you from being nickled-and-dimed every time a loss assessment happens.
This coverage protects your condo unit (as compared to the building and common areas) when the master policy fails to protect you, or if its limits are insufficient.
Note: Your liability coverage would still be a part of your personal policy, as it covers your legal liability. If your dog bit someone, then your personal home policy would cover it rather than the condo’s master policy.
Those are the highlights of having condo insurance coverage explained. While condo policies work similarly to home and tenant policies in many respects, the key differences can make a difference in saving hundreds of dollars per year.