If you rent or lease a condo, you need to protect your property with condo insurance.
What does condo insurance cover?
Your condo association’s insurance policy likely covers certain aspects of your condo, such as common or shared areas. As a result, it may cover your condo unit, but not any improvements you make or fixtures you add to the condo. It also won’t cover your personal possessions. Your policy is designed to make up for this shortfall. It’s a mixture of the better-known landlord insurance and renters insurance but is specially designed for your particular condo.
Protecting your personal property in your condo.
Condo insurance covers your personal belongings inside your condo unit. That means everything from your appliances to your clothes may be covered in the event of a loss. Without it, you would have to replace your lost or damaged possessions out-of-pocket. Your policy may also cover damage caused by theft, fire, severe wind, lightning strikes, and frozen pipes. It’s important to note, however, that condo insurance does not usually cover flooding.
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Betterments and Improvements
Risk Factor
Any betterments, improvements, alterations, or additions made to your condominium are subject to damage. However, it’s important to make sure they’re covered appropriately.
Solution
Be sure to obtain coverage for any betterments, improvements, alterations, and additions made to the unit. This includes, but is not limited to, kitchen cabinets, built-in wall units, wall-to-wall carpeting, wallpaper, paint, bathroom fixtures, tile and wood flooring, and more.
Personal Property
Risk Factor
Unpredictable losses can occur to your property due to burglary, fire, water damage, storm, and more.
Solution
Personal property, such as furniture, rugs, TVs, stereos, clothes, and more may be covered under your basic insurance policy. However, items like jewelry, furs, silverware, antiques, collectibles, and other valuables should likely be insured separately.
Additional Living Expenses
Risk Factor
Additional living expenses can be incurred if there is damage to your unit due to a fire, storm, or other event resulting in your need to live at a temporary residence.
Solution
Ensure you have the proper coverage in case you need to live elsewhere for a little while. Coverage usually includes hotel bills, restaurant meals, and other living expenses incurred while your residence is being repaired or rebuilt.
Personal and Family Liability
Risk Factor
You're responsible if a guest in your unit trips and falls or sustains an injury while on your property or if you cause damage to other units.
Solution
Be sure that you have coverage for claims made against you for bodily injury or property damage caused by your negligence, whether intentional or not. This might include damage to other units in the building, perhaps caused by a leaking pipe in your unit or otherwise.
Medical Expenses
Risk Factor
You're responsible if a guest is injured while on your property and you may be required to pay their medical expenses.
Solution
Ensure your insurance policy covers this risk. In the event a person is injured in your unit, he or she can submit medical bills to your insurance company. Medical expenses are usually paid without a liability claim being filed against you, with typical limits ranging from $1,000 to $5,000.
Loss Assessment
Risk Factor
If your building owner or association suffers a loss and doesn't have adequate insurance coverage of their own, they may require you to help pay for the loss via an assessment.
Solution
Consider loss assessment coverage to protect yourself in the event of an assessment caused either by a property (building) or liability loss. A range of limits may be available.
Physical Damage
Risk Factor
Physical damage can happen in many ways. As one example, suppose a fire unexpectedly breaks out in the utility closet and consumes the building causing significant damage.
Solution
Be sure your condominium owner, association, or corporation carries a comprehensive policy to cover the risk of physical damage. It’s important to know what the policy includes and what it doesn’t, which could range from covering just the shell of the building to including things like floors and walls.
Know your liability coverage options when living in a condo.
In addition to property coverage, condo policies may also include liability coverage. For example, if a guest is injured in your condo, it may pay for their medical expenses. It may also cover you in the case of a lawsuit if you are responsible for damages to another condo property. Additional living expenses may also be covered if there is damage to your condo unit that renders it unlivable.
Who is responsible for medical expenses from injuries?
If a guest is injured in your condo, you are responsible. You need medical expenses coverage as part of your condo policy so your insurance would cover their medical expenses, up to a selected limit.
Are additional living expenses covered?
If your condo insurance policy includes additional living expenses coverage, things like hotel bills, temporary rentals, and meals may be covered while your condo unit is being rebuilt or repaired.
The benefits of getting coverage for your condo.
It may seem confusing to figure out exactly what coverage you need for your condo unit. The most important thing to know is that condo insurance is typically inexpensive in comparison to the potential out-of-pocket costs of replacing your personal belongings.
If you are living in a condo unit, you need condo insurance. Contact us to go over what your condo association doesn’t cover and how your policy may fill in the gaps.
Condo Insurance FAQ
Is condo insurance required by law?
Condo insurance, often written as an HO-6 policy, is generally not required by law, though your mortgage lender or condo association may require it. Many lenders require proof of coverage as a condition of the loan, and some associations’ governing documents require unit owners to carry their own policies. Even when it’s optional, the master policy usually doesn’t cover your belongings, so you’d have to pay out of pocket to replace them.
How much condo insurance coverage do I need?
The right amount generally depends on what your master policy leaves you responsible for, the value of your belongings, and the cost to replace any interior upgrades you’ve made. You’ll also choose between replacement cost, which pays to replace items without factoring in depreciation, and actual cash value, which pays the depreciated amount.
Does condo insurance cover water damage from a neighbor's unit?
It may. Condo insurance might help cover damage to your belongings and the interior of your unit from a sudden, accidental water event, such as a burst pipe in the unit above you. Slow or ongoing leaks, flooding, and sewer or drain backup are commonly excluded, though water backup coverage may be available as an add-on. If a neighbor’s negligence caused the damage, your insurer may be able to seek reimbursement from their liability coverage. Because exclusions vary by policy, ask your agent how water damage claims are handled before you need to file one.
Can I use condo insurance if I rent out my unit?
Condo insurance is designed for owners who live in their unit, so if you rent it out, your coverage may need to change. Depending on the insurer, that could mean adding a rental endorsement to your condo policy or switching to a landlord policy built for rental condos. Your tenant would usually carry renters insurance for their own belongings, since neither policy is designed to cover them. If you’re moving out and renting the unit, tell your agent before the tenant moves in so your coverage matches how the unit is being used.
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