While a condo owner is not responsible for repairing common areas and exterior areas of the building in which they live, this doesn’t mean you should forego having adequate insurance coverage! To help you understand the types of insurance you should consider for your condo, note a few different types of policies offered to condo owners and the protections they provide.
When you own a condominium, you are typically responsible for repairs to the unit’s interior, while the condo association is responsible for repairs to the building’s common areas and exterior, including its roof, lawn, and parking lot. Because a condo owner is not responsible for repairing the actual structure in which they live, you might wonder if you need homeowners insurance or any other type of coverage for your condominium.
For homeowners, dwelling coverage reimburses the cost of repairing or even rebuilding their home if it should be damaged by a fire, burst plumbing pipe, or other such disasters. Dwelling coverage for a house includes the inside as well as the outside of the home, including the roof, porch, windows, and other exterior surfaces.
For a condo owner, dwelling coverage, or an HO6 policy, provides what is called walls-in coverage.
This insurance reimburses the cost of repairing the structure from the walls in, meaning the ceilings, floors, drywall, interior doors, and other structural materials inside the condo itself.
Liability coverage reimburses a homeowner the costs for things like injuries suffered by someone on their property, if their dog bites someone, or if they cause damage to a neighbor’s home.
A condo owner can also purchase liability insurance, for the same protections.
If, for example, a condo owner’s bathtub overflows and floods the unit below, or if a visitor trips over loose carpeting in their unit and breaks an ankle, liability insurance pays for repairing that neighboring unit, their visitor’s medical bills, and so on.
Personal property insurance
Personal property insurance reimburses you for damaged or ruined personal property, meaning items that are not part of your condo itself. For instance, after a fire, dwelling coverage pays to repair a home’s structure but not for destroyed furniture and clothes. Those items would be reimbursed through personal property insurance.
If you own a condo, consider the expense of replacing all of the following inside your condo if they should be damaged or destroyed by a fire or other disaster, and this can help you decide if you should invest in personal property insurance:
- Area rugs
- Major kitchen appliances (i.e., the refrigerator, dishwasher, freezer, etc.)
- Small kitchen appliances (i.e., your coffeemaker, blender, etc.)
- Curtains and other window treatments
- Electronics (televisions, computers, gaming accessories)
- Musical instruments
- Clothing, shoes, and accessories
- Bedding and other linens
If you can afford to replace these items all at once, you may be able to skip personal property insurance.
Limitations and Exclusions
When shopping for personal property insurance, note that your policy might be limited to 50% of your dwelling coverage policy. In other words, if you have $50,000 worth of dwelling coverage for your condo, your personal property coverage might be limited to $25,000.
Also, personal property insurance might not cover certain expensive items; this might include fine jewelry, firearms, antiques, furs, and expensive artwork, all of which are often covered by their own policies. Be sure you ask your agent about any excluded items when choosing a personal property policy.
Loss of use policy
Condo owners can purchase what is called a loss of use policy. This policy reimburses your expenses if you cannot use your condo while it’s being repaired after a fire or other such disaster.
A loss of use policy typically covers the cost of a hotel as well as certain everyday expenses you wouldn’t otherwise face while in your condo. For instance, if you have added expenses for your daily commute while staying in a hotel, or if you cannot cook in your hotel and need to eat out more often, your loss of use policy may cover at least a portion of those costs.
Vacant condo coverage
It’s not unusual for a condo to be vacant more often than a house, as condos are sometimes used for seasonal occupation only. A condo owner is also more likely to buy a home eventually, taking occupancy of the house before the condo is sold. A condo is also a favorite choice for retirees and elderly persons, and the unit may then become vacant after their passing.
Insurers often consider vacant properties a higher risk for damage caused by burglary, vandalism, and so on, so these repair costs aren’t always reimbursed by standard dwelling coverage. If you own a condo and are looking to buy a home soon, or if your elderly parents live in a condo, you might strongly consider adding vacant condo insurance to your policy.
Choosing insurance coverage
If you have a mortgage for your condo, your lender might require dwelling coverage for your unit at the very least. A condo association might also require dwelling and liability insurance, to ensure the condo association does not face costs associated with injuries or damage caused by any individual owner.
Some condo associations might also require additional policies that cover shared responsibilities that exceed the building’s insurance coverage. For example, shared assessment insurance covers the cost of repairing fire damage in a common area if the costs exceed the insurance carried by the condo association.
A condo owner should also remember that it’s not necessary to have more insurance coverage than the value of your property, but it’s also good to have all the coverage needed for a “worst-case scenario.” Replacing all your personal items or having to pay for repairs to a neighboring unit because of an accident in your unit can be prohibitively expensive, so never forego getting the insurance needed to protect your condo and everything in it!