Owners of condominium units should apply for their own insurance policies, for their peace of mind and financial support in case of unfortunate incidents. During trying times, those who availed of condo insurance will be overjoyed that they decided to do so, while those who skipped signing up will regret their decision. With its importance established, here is everything you need to know about condo insurance.
Master Policy Vs Condo Insurance
Unlike homeowners, condo owners do not own the building they live in, nor the land where the structure stands. Condominium buildings are covered by a master policy or a homeowner’s association policy that insures the exteriors and common areas of the building, but the units themselves will require their own insurance.
There are three types of master policies, namely all-in and all-inclusive, special entity, and bare walls in and wall studs in. An all-in and all-inclusive policy covers the exterior and interior of each individual unit, including fixtures, installations, and additions. A special entity policy covers nearly the entire condo structure, including fixtures in units, but not structural improvements or unit additions. A bare wall-in and wall studs in policy covers only the basic structure of each condo unit.
In all types of master policies, unit owners are left responsible for their personal property. This is where condo insurance comes in. Knowing the type of master policy applied to the building also gives unit owners an idea on what kind of condo insurance that they should avail.
Condo Insurance Coverage
Condo insurance mostly covers damages within the unit, such as the interior walls and floors, and the personal property of unit owners, including items like appliances and furniture.
The types of incidents normally covered by condo insurance include fire and smoke damage, explosion damage, wind and hail damage, lightning damage, theft, vandalism, and burst pipes. Examples of incidents typically not covered are earthquake damage, flood damage, intentional damage, and routine wear and tear.
Condo insurance comes with two forms of coverage: cash value, or replacement cost. Cash value coverage recovers the value of insured items less depreciation, while replacement cost coverage looks at how much it will cost to replace the insured item.
For example, if a unit owner’s TV is stolen, the insurance company will write a check for how much the TV costs at the time it was stolen under cash value coverage, or a check for how much a new TV will cost under replacement cost coverage. Cash value coverage is better for new items, while replacement cost coverage is better for depreciated items.
Preparing for Condo Insurance
Before buying condo insurance, unit owners need to make certain preparations to make sure that their units are properly covered, and that they will not overpay for their policies.
Unit owners can make a complete inventory of all their personal possessions inside the condo. This will determine how much insurance coverage the unit will need. It will also help unit owners file claims in case of burglaries, as they will be able to easily find out what was stolen.
Unit owners should then thoroughly check the coverage of the building’s master policy. By understanding what is covered by the homeowners association’s insurance, unit owners will not find themselves under-insured, and leave them unprotected from certain types of damage, or over-insured, which would make them spending more than what they only need to pay.
Buying Condo Insurance
There are several ways to purchase condo insurance, but one of the most recommended options is to work with an independent agent.
An independent agent will show unit owners the comparison between condo insurance rates of different providers and will help them choose the best policy according to their needs. The agent will also be able to provide unbiased consultation on the different policies and available discounts.
What to Do After Buying Condo Insurance
In order to ensure that all their personal property in the condo is covered, unit owners should update their policies in case they make an expensive purchase.
Unit owners are also required to properly maintain their condo unit, as insurance companies may charge them for liabilities in the case of things like mold and general disrepair. Unit owners should keep the structural integrity of their units, or else their premiums may climb unnecessarily.
Condo Insurance Claims
In the event of an incident, unit owners will need to file a claim with their insurance company, the homeowners association’s insurance company, or both, depending on the situation.
For example, if a condo unit was burglarized, units’ owners will need to file a claim with their insurance company. However, if the burglary involved breaking and entering that destroyed the external doorway, or if it happened due to lax building security, then the unit owner may also file a claim with the homeowners association’s insurance company.