Condo insurance is a type of protection that aids in guarding against damages and maintenance expenditures for a condominium unit. Condominium insurance frequently offers coverage against theft, vandalism, fire damage, water damage, and other risks.
You just own your unit in a condo, not the entire building, unlike a normal home. As a result, cooperatives and condominiums must have two different types of property insurance:
- Principal Policy: Provided by the governing body or homeowner’s association. The communal, shared areas are usually covered, as well as liability and physical damage insurance. These places include basements, laundry rooms, rooftops, stairwells, and elevators.
- Personal (Owner’s) Insurance: Acquired by you, the owner
- HO-6 Coverage: The coverage (HO-6) often covers physical damages to the building’s structural components and your personal items. Carefully read the policy because often only bodily injury brought on by one of the “identified perils” stated in the policy is covered. Lightning, fire, smoke, vandalism, and theft are a few hazards.
Additionally, you can acquire more insurance to protect yourself against potential losses:
- Property damage you’ve caused
- Liability for third-party injuries
- Additional costs of living (if you are forced to move out temporarily)
What is HO-6 Insurance?
Condo insurance is also known as HO-6 insurance. The phrase refers to various formats for a house insurance policy in the industry. In contrast to renters, who typically purchase HO-4 insurance, most homeowners get HO-3 coverage.
HO-6 policy forms cover condos and co-ops. Despite having various ownership forms, individual owner insurance plans function very similarly in condominiums and co-ops.
What Makes Condo Insurance Necessary?
Even if your condominium association has its own insurance, condo insurance can still be useful. The condominium complex, jointly held property, and liability insurance for the association may all be covered by their insurance.
Unfortunately, there are a lot of situations where your insurance coverage won’t protect you or your possessions, such as a break-in, water damage to the walls of your living room, or someone tripping and getting hurt on your wet kitchen floor. You, therefore, require condominium insurance created especially for owners of condos or co-ops.
The condominium rules aid in safeguarding your belongings and the interior of your apartment. Additionally, you will be protected from liability for other people’s property damage or bodily harm. Obtaining an estimate for a condominium insurance policy that offers these protections is simple.
Do I Need Condo Insurance?
Mortgage lenders typically require you to purchase condo insurance, much like homeowners insurance. The lender’s financial interest is safeguarded by having this coverage in place for the duration of your loan.
You might still be responsible even if you’ve paid off your mortgage or bought the house altogether. Many communities demand that owners purchase individual condo insurance; some even set minimum levels of protection.
What Is Covered by an Insurance Coverage for a Condo Association?
Your condo payments frequently include a portion that goes toward the association’s umbrella insurance plan. This insurance typically covers catastrophes and liability problems like:
- Exterior of the building harm (for instance, storm damage to the roof or outside siding is typically covered by the master policy)
- Damage to general areas (Damage to areas like the lobby, elevators, hallways, and tennis courts is covered under your association’s master policy)
- Injuries received in public places
Remember that the advice above is only general advice. Consider requesting a copy of your association’s master policy from your property manager or a condo board member. A clear understanding of what is covered can help you decide what protection you require for your apartment.
What is Covered by a Condo Insurance Policy?
What is specifically covered by the condominium association’s master insurance policy depends on state law and the articles of the association.
Typically, the association’s insurance only extends to the external walls, leaving you liable for the interior walls, maybe even the fixtures, and your own personal property and responsibility. Your individual condo policy would come into play in this situation.
The majority of insurance will provide coverage for losses caused by:
- Burning or lighting
- Windstorm
- Smoke
- Vandalism and other malicious behavior
- Theft
- Accidental water release
If your furniture or other possessions are damaged or stolen due to one of the events covered by your HO-6 policy, personal property coverage will pay to replace them. Typical examples of these “designated hazards” are incidents involving fire, wind, and hail.
A TV, two laptops, and a necklace are stolen from your condo by a robber who also takes your jewelry. You would be compensated for those losses by insurance, less your deductible.
Standard condo insurance may only cover items up to a particular amount, such as jewelry, gadgets, or artwork. You might need to purchase additional coverage if you own valuable products. Before covering a costly item, the insurance company will often want an appraisal or a professional evaluation of the item’s value.
There are two varieties of coverage for personal property. Usually, “actual cash value” is set as the default, implying that your insurer will reimburse you for the worth of your belongings when they are stolen or lost.
Older things might not bring in much money with this choice. Pay more for replacement cost coverage to get enough money to replace your ten-year-old dining room set with a brand-new one.
Additional Costs for Living or Loss of Usage
Condo insurance may pay for a hotel and other costs if you cannot stay in your unit due to a covered occurrence.
- Example: You must vacate your condo for a few weeks while repairs are made to a busted pipe. Any additional laundry costs, restaurant meals, or hotel fees over and beyond what you would typically pay when living at home could be covered by HO-6 coverage.
Negligence and Medical Costs
If you are sued for negligence or causing damage to someone else’s property, individual condo insurance can assist in covering the legal expenses. Personal liability insurance may also cover the litigation costs if a visitor is injured on your rental property or your dog attacks a park visitor. Regardless of fault, medical payments coverage typically has a lower cap and can cover an injured party’s medical costs.
- Example: A friend breaks their wrist after tripping over an extension cord at your condo. Your medical payments coverage can cover their medical expenses.
Building or Dwelling Property Insurance
Depending on the master policy of your condo association, you could be required to insure the interior of your unit with dwelling coverage, commonly known as building property coverage.
Loss Evaluation
Each unit owner could need to contribute to the overage cost if your condo association repairs significant hail damage to the building, for example, by going over the limitations of the master insurance. This cost can be covered if your condo insurance policy includes loss assessment coverage.
The association may divide the high deductible on the master policy among all owners of units. Alternatively, if the damage occurred inside a condo unit owner’s building, the association might demand that person pay the entire deductible.
My Personal Policy and the Main Policy Cover the Same Losses. How Will My Claim Be Paid? Which Policy?
Your homeowner’s policy will cover any leftover losses under HO-6 coverage, but only after the master insurance policy has paid its full amount.
Do I Need an Attorney to Help Me with My Insurance Issue for My Condominium or Cooperative?
Homeowner’s insurance contracts can be incredibly complicated and perplexing. Additionally, the regulations governing homeowner’s insurance vary from state to state. It will be easier for you to decide what kind of homeowner’s coverage you require if a real estate attorney reviews your master policy.
