As a condo owner, you have unique responsibilities which include figuring out your ideal condo insurance policy. That’s why condo (HO-6) insurance is designed to cover your property and liability. HO-6 policies also include dwelling coverage for the parts of your unit that you are responsible for, as determined by your HOA’s master policy. This includes alterations, appliances, and upgrades you make.
Building Property Coverage
Condominiums need good insurance, just like houses do. HOA master policies typically cover the exterior of the building, common areas like the lobby and hallways, and insurance for the condominium structure itself. They may only partially cover the individual condo owners’ property inside their units. Condo owners’ condo insurance (HO-6), often called personal protection or PP, is a necessary supplement to an association policy.
The rule of thumb for condo insurance policies is to cover your condo interiors from the walls, including built-in bookcases, cabinets, other furniture, and appliances and fixtures like sinks, toilets, and tiling. It also protects against financial loss if covered perils destroy the condo’s permanent structures up to your coverage limit. PP can include options like actual cash value or replacement cost reimbursement, and you can set your deductible on a per-building or per-loss basis. In addition to building and personal property coverage, HO-6 policies typically provide liability insurance that helps pay for legal expenses or medical bills you incur if someone is injured in your home and claims you are responsible. This is similar to homeowners’ or renters’ insurance, and it’s usually a requirement for mortgage loan approval.
Personal Property Coverage
The personal property coverage in a condo insurance policy helps pay for things like furniture, appliances, and electronics if they’re stolen or damaged by a covered peril. Like the liability coverage in a home or renters insurance policy, it can help protect you from judgments against you that exceed the limits of your primary policy. You can also purchase scheduled personal property coverage for more valuable items like jewelry, firearms, or computers.
The type of condo insurance master policy your condominium association has can directly impact how much dwelling and personal property coverage you need in a condo policy. Some master policies offer “all-in” coverage, while others limit condo owner coverage to only what’s inside the walls of your unit. If your condo association has a “bare walls” policy, you’ll need additional dwelling coverage to cover upgrades like custom built-in cabinets and hardwood floors.
Your personal belongings are usually protected up to the limits of your policy, but you can buy an extended limit for a small extra premium. The best way to determine how much personal property coverage you need is by doing a home inventory. Make a list of your possessions, their purchase date, estimated value, and serial numbers or receipts. You can also consider adding a personal excess policy similar to an umbrella policy for added liability protection.
Liability Coverage
Whether the building or your personal property, condo insurance can help protect your investment. Condo owners typically purchase two policies – one for the building and the other for their personal belongings. Both policies protect against damage, loss, and liability. The policy your buy depends on how much you want to cover and the level of protection you need.
Typically, condo policies cover the following:
- Building property coverage, or HO-6 policy, protects your condo’s interior walls and fixtures from damage caused by a named peril like fire, theft, tornado, or hail.
- The policy can also reimburse living expenses if your unit becomes uninhabitable because of a covered loss.
- Personal property coverage, or HO-2 policy, covers furniture, electronics, and other movable items.
- It may also include jewelry, fine arts, and collectibles replacement costs.
Most condo policies offer $100,000 in personal property coverage, and you can increase the limit to fit your needs. Liability coverage is another part of the standard condo insurance policy that protects if someone is injured in your home or your property. It can pay for legal expenses, medical costs, and other damages. Most condo policies come with $100,000 in liability coverage, but you can increase the limit by purchasing an umbrella policy.
Additional Coverage
Every condo association has a master condo insurance policy that protects the building, common areas, and some aspects of individual units. However, these policies don’t cover personal belongings or cover liability lawsuits that could be brought against residents. HO-6 condominium owners’ insurance picks up where the HOA policy leaves off, providing coverage for what isn’t covered by the master policy, personal property, and liability protection.
Condo homeowners insurance typically includes a standard $100,000 to $300,000 in personal liability coverage, and you can usually add an umbrella policy to provide additional liability protection. It’s important to have enough coverage to cover the costs of damages you or your family may be held responsible for.
For example, suppose a fire in your condominium causes $350,000 of damage to the building’s structure and common areas, but the condo association’s master policy only has $300,000 in coverage. You might receive a special assessment notice to pay for some of the cost in that case. Loss assessment coverage can help protect you from these unexpected expenses by covering a portion of the bill.
Condominium insurance may also include mold coverage, which is only sometimes included in a standard HO-6 condo policy. If yours does not, you can purchase an optional endorsement to add it. You can also add loss-of-use coverage, which covers the actual cost you would incur if a covered disaster makes your unit uninhabitable for an extended period.
Read More: How Hurricane-Proof Windows Can Save You Money on Energy Bills