Condominium insurance and its Coverage
Updated: Apr 24, 2022
What is a Condominium?
A Condominium or Condo is a building structure consisting a number of units and each of the unit is owned by a separate owner and has several units within the community. Condo owners share common areas such as Pools, Gym, Sports area, Golf course, Elevators etc within the community. There is usually a HOA or a property management company in charge of maintaining Covenants, Conditions and the Restrictions of the community for a fee from the owners of the community. In most communities, HOA is responsible for the maintenance of Exterior features, Common areas, area outside your home etc. It might be like an apartment complex or a detached unit.
What is a Condo insurance policy?
Condo insurance policy is also called as HO-6 policy. Condo policy is same as the homeowners policy with some differences. Just like the homeowners insurance, mortgage lenders will most likely expect you to buy condo insurance to protect their financial loss. Even if you have paid off the mortgage, some HOA's may require you to buy condo insurance policy, The type of policy and the coverage limit to be decided depends on approximately how much it would cost to rebuild your home, what does your HOA insurance policy cover etc.
What is HOA insurance policy?
The HOA insurance policy covers the common areas, exterior features like exterior walls, roof and the areas around your home. It's important to know what is covered in your HOA insurance policy to better plan your insurance policy coverage. HOA policies usually cover property damage coverage and common areas liability coverage. There are two types of HOA policy and its coverage varies accordingly.
All in Policy - All in policy or Master policy usually covers all the common areas of the community along with the interior and exterior features of your home.
Bare Walls Policy - Bare walls policy usually covers all the common areas of the community along with the exterior features of your home.
How much does it cost?
The cost of Condo insurance policy vary upon different factors used by the insurance companies to fix a rate for your policy. Everyone's insurance cost is unique as several factors are taken into account before deciding the cost for a policy. Some of the factors are
Type of Policy
Age of the unit(home)
Prone to natural disasters
Type of construction
Policyholder's Age, Marital status,
Proximity to fire hydrant or a fire station
Features like hot tub, fire place , trampoline etc may increase the cost of your policy due to increased liability issues. Increasing the amount of your deductibles, investing in home security system, upgrading and disaster proofing your home may reduce the cost of your insurance policy.
What does it cover?
A standard Condo insurance policy usually covers similar perils that are covered under a standard homeowner's policy like Fire, Lightning, Windstorm, Hail, Theft, Vandalism, Weight of ice or snow etc. The following parts may be included in your insurance policy depending on the Policy Holder and the Policy Provider.
Building property Protection
This covers the structure of your condo unit and the other items in your home's interior such as fixtures, built in appliances, Flooring, Walls etc. If your home is damaged by any covered peril like fire, lightning etc, it helps cover the damage caused on the interior structure of your home such as walls, flooring etc whereas the exterior features like exterior walls, roof are typically covered by your HOA insurance policy.
This covers your personal property or belongings such as electronic items, clothes, furniture etc. Some insurance companies offer the Actual cash value of your personal property, this is the depreciated value of your personal property and some may offer the replacement cost of your personal property.
This provides coverage in the event of claim against you for the property damage or bodily injury caused by you. It also pays for the medical bills resulting from the accident caused on your home. It may also include lawsuits, legal fees, court costs etc. For example, you accidentally damaged your neighbor's fence or your guest slips and falls and gets hurt in your condo.
Loss Of Use
This covers when your condo becomes unlivable due to certain water damage or damages by the natural disasters covered by your policy, this may cover and provide compensation for alternative living expenses until your home is being repaired and ready to live. the amount of compensation provided and the duration of coverage depends on your policy and insurance company.
This is unique to each condo owner and it helps to cover the cost that exceeds the coverage limit of the master policy. For example, if a fire damages multiple units of a condo and the master policy limit is $500,000 and the damage caused is $525,000, then the remaining $25,000 is charged to the owners accordingly. If your policy contains Loss assessment coverage, then you may be covered and you don't have to pay out of pocket to cover the cost.
This helps cover the costs if someone injures themselves when present in your condo. This excludes anyone who reside in your condo.
Umbrella insurance is a type of Insurance policy which goes in effect when you exceed the coverage limit of your condo's liability coverage. For example, if your regular condo liability policy covers only up to $100,000 but your liability claim reaches around $150,000, then the excess amount of $50,000 will be covered by your Umbrella Insurance Policy. This includes Legal fees, Court costs, Judgements, Defense costs, Sued for libel or slander etc
Water backed up from clogged drain or sump pump may not be covered by your standard condo policy, it may be added on as an additional coverage.
Endorsements and Floaters
Endorsement and floaters are an additional insurance coverage for a specific high priced item for which the coverage limit under the standard policy is way below. In this type of coverage the specific item such as jewellery, art work etc must be taken to be appraised, Once appraised, the insurance company will determine a premium based on appraisal value.
Damages caused by floods are not covered by the standard condo insurance policy. Depending on the location and chances of getting flood damage, it is advisable to get a separate Flood Insurance Policy. You may also have an option to add on the flood insurance to your condo policy.
Damages caused by Earthquakes are not covered by the standard condo insurance policy. Depending on the location and chances of getting earthquakes, it is advisable to get a separate Earthquake Insurance Policy. You may also have an option to add on the Earthquake insurance to your condo policy.
The events and items covered by your insurance policy differs based on your policy and insurance provider. The conditions and limitations of the coverage vary upon your specific policy. Inform insurance company ahead of time if you have any expensive structures in your property. This will act as a documentation for coverage in case any mishap happens.
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