Condo Insurance

Just as homeowners need to insure the houses they own, condominium owners should insure the condo units they own. The insurance needs of condominium owners, however, aren’t the same as those of homeowners. That’s why there’s condo insurance, which is similar to -- but not completely the same as -- homeowners insurance. Condo insurance is like homeowners insurance that’s designed to meet the unique insurance needs of condominium owners. Most condo policies offer a combination of structural coverage, personal property coverage and liability coverage.

The amount of structural coverage included in condominium policies varies a lot, because the amount of structural protection that condo owners needs varies. Some condo associations carry master policies that offer robust protection for individual units, which lets condo owners purchase condo policies that offer only a basic level of structural protection for their unit. Rather than getting duplicate coverage for their unit, they can rely partially on the protection afforded by their condo association’s master policy. Other condo associations have master policies that provide minimal protection for individual units. In some cases, master policies may insure little more than the walls of individual units -- features like cabinets, flooring, and ceiling fans may not be covered. When master policies offer little protection for individual units, condo owners usually need a condo policy that offers lots of structural coverage.

The personal property coverages offered by condominium policies can vary in at least three significant ways. First, policies frequently have different personal property limits and deductible, which both drastically influence the amount of personal property coverage that a policy offers. Limits generally determine the maximum that a policy will pay if belongings are damaged or destroyed in a covered claim, and deductibles determine how much a condo owner must pay out of pocket before their policy will begin paying for a valid claim. Second, policies often have set limits for high-value belongings, such as jewelry, furs, and collectibles. The exact limits that policies have for high-value belongings can vary, and they can be especially important to condo owners who have affected high-value items. Finally, condominium policies usually provide either replacement value or actual cash value coverage for personal belongings. Replacement value coverage normally offers enough coverage to replace insured belongings, while actual cash value typically only insures belongings up to their depreciated value. In most cases, belongings’ depreciated value is less -- and sometimes much less -- than their replacement cost.

Condominium insurance generally doesn’t cover the common areas of condo complexes. The responsibility of insuring areas like entryways and hallways usually falls to condo associations, which generally are able to purchase coverage for common areas through condo association insurance policies.

Most, if not all, condo owners should have condominium insurance. Few owners could afford to rebuild their condo and replace everything in it if there was an incident. With condominium insurance, condo owners don’t have to worry as much about potential incidents.