You own a condo (or want to buy one), and you know you need condo insurance, but it’s confusing. How much do you need? What does the condo association cover? Do you need a special policy?
Let’s take the confusion out of condo insurance once and for all.
The Condo Association’s Master Policy
What determines the amount or type of condo insurance you need is your condo association’s (COA’s) master policy. This is the insurance policy that the association purchases to cover the building(s) and common areas like a clubhouse, pool, tennis courts, or parking lots. You help pay for that coverage with your COA fees. There are multiple types of master policies that an association can purchase:
Bare walls-in: This type of insurance coverage by the COA only takes care of damage to exterior framing, exterior walls, and the roof as well as common areas that all residents can use. You are responsible for everything on the inside of your condo. There are levels to this coverage from studs-in which excludes the drywall (meaning you have to replace it) to walls-in which includes the drywall (meaning the master policy covers it).
All-inclusive: This master policy covers any repairs to your unit to return it to its pre-damaged stage, including appliance, fixtures, and improvements.
Single-entity: Here the COA’s insurance coverage will replace or repair everything in your unit except personal property and any upgrades or improvements you made.
Don’t be surprised that the most common master policy tends to be some form of bare walls-in coverage. Which means you’ll most likely need a more comprehensive condo insurance policy. Your Realtor or the COA should provide documentation to help you purchase the right kind of insurance coverage.
Condo Insurance for Your Unit
Once you know what the master policy covers, you can begin shopping around for condo insurance. In general, condo insurance will be required. Mortgage companies require it as part of financing, and many condo associations require it as part of the COA rules and requirements. Even if it’s not required, it’s a good idea because it protects you financially from disaster and damage.
Your condo insurance policy can cover everything the association’s master policy doesn’t. This includes the walls, personal property, liability for damage or injury, and living expenses if you need to relocate after a covered peril. It’s important to choose the right policy limit and to understand what is and isn’t covered by your policy. Some condo insurance policies will name specific perils and some will include “standard” perils and only list what isn’t covered (like flood or earthquakes). Buying a separate flood insurance policy is a good idea — and required if you want coverage for flooding.
Loss Assessment Coverage
You may also want to purchase loss assessment coverage as part of your condo insurance policy. Part of living within a condo association is that sometimes additional costs are passed onto unit owners. With loss assessment, this occurs when damage to property within the COA exceeds the limits of the master policy. The association’s insurance pays up to the policy limit, and then the COA will assess a fee to be paid by each condo owner to cover the rest. Loss assessment coverage can pay all or some of your portion of the loss assessment, depending on the limit you choose.
Whether you’re buying a new condo or you want to update a current policy, contact Charlotte Insurance for your condo insurance needs. We can help you choose the coverage that offers the most protection for the best price.