For most people, a condominium is a prized possession. It’s therefore essential to ensure that your condo and valuable items are well-protected. But you’ll need coverage to protect it. So the question is asked, what is condo insurance?
Different types of Home Owners Association (HOA) insurance policies offer various coverage levels. The policies cover shared structures and common areas. This means you need to purchase a condo insurance policy to protect your unit and belongings.
Let’s explore what condo insurance is, what it covers, and how much it costs.
Condo (HO-6) Insurance Defined
Condo insurance is also called an HO-6 insurance policy. What does HO-6 insurance cover? It protects your condo unit against damages and provides living expense coverage in case it’s no longer habitable. The insurance policy also includes personal liability coverage if your guest gets injured.
HO-6 policies only protect the individual unit. Common areas in the building are usually covered by the condo association or homeowners’ policy.
The condo unit owner bears the responsibility of purchasing the condo insurance policy. It covers repairs inside your unit and the replacement of personal belongings in case of theft or damage. This insurance also protects against claims in case of injury inside your condo.
Is Condo Insurance Required?
Mortgage providers often require you to acquire condo insurance. It protects them financially throughout the loan term. Most HOAs also require you to purchase condo insurance, even if you purchased the property upfront or have already cleared your mortgage.
What Does a Condo Association’s Insurance Policy Cover?
The HOA or condo association has a master insurance policy. It covers common areas in the building such as elevators and lobbies. Certain exterior parts of the building, including the roof, are also covered under these policies.
Most master insurance policies cover specific liabilities and disasters. A few examples include:
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- Exterior and roof damage caused by a storm
- Damage to common exterior areas like hallways and lobbies
- Liability costs from injuries in common areas
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There are three main types of condo master insurance policies:
1) Bare Walls Coverage
This master insurance policy covers the structure, most furnishings, and fixtures in shared areas. The policy also protects other properties that the condo association owns.
2) Single Entity Coverage
This policy includes everything covered by the bare walls plan, plus built-in items like the fixtures inside the condo.
3) All-In Coverage
This policy covers all parts of the condo structure, plus other property that the condo association owns. It offers the most coverage, including all additions and improvements to the condos.
What Does Condo Insurance Cover?
Condo insurance policies cover your personal items and protect you against liabilities if you get sued for negligence. It also covers your living expenses if you have to relocate due to a disaster.
Depending on the type of insurance policy your condo association has, you may want your HO-6 insurance policy to cover the appliances and fixtures inside your unit as well.
Condo insurance policies come in several coverage types:
1. Dwelling Coverage
Dwelling coverage for condos protects the items that are your responsibility. It’s inclusive of any improvements to fixtures and appliances.
It’s important to know the exact parts of the condo you’re responsible for and how much the coverage will cost if you’re considering dwelling insurance.
2. Condo Insurance for Personal Property
Condo insurance for personal property covers your items like appliances, furniture, and clothing. It has few specific exclusions and limitations.
3. Loss of Use Coverage
Loss of use coverage takes care of your living expenses if you cannot live in your condo due to a sudden change in living conditions.
4. Medical Payments Coverage
Medical payments coverage assists in paying for medical bills in case of an emergency. It can also help cover bills if your pet or family member causes an injury, regardless of the location of the incident.
5. Personal Liability Coverage
Personal liability coverage takes care of legal fees. For example, if you get sued for injuries to guests in your condo, it can cover the legal fees and medical bills that you must pay.
6. Condo Flood Insurance
Natural disasters usually surprise people. However, the flood insurance policy is generous enough to protect your personal belongings and condo in case of damage due to floods.
7. Umbrella Insurance for Condos
Umbrella insurance takes effect when the cost of a covered loss exceeds your policy’s limit.
Optional Types of Condo Insurance Coverage
You can get additional coverage for your insurance policy, for example:
‘New for Old’ Coverage
“New for Old” coverage pays the current cost of replacing your items with new ones. It doesn’t matter how long you have had the items in your possession.
Valuable Items Blanket Coverage
This type of coverage is vital if you possess valuable items such as art. In case of damage or theft, it raises your policy’s limit to $10,000 for each item.
Scheduled Personal Property Coverage
This type of coverage provides additional protection for valuable or expensive items in case of damage.
How Much HO-6 Insurance Do I Need?
The amount of condo insurance you require depends on the type of master insurance policy your HOA or condo association uses.
Before selecting an HO-6 policy, go through the HOA’s or condo association’s master policy. Anything that is not covered under that policy is your responsibility.
To determine the amount of coverage required for your personal items, take an inventory of your home. If you have expensive artworks or other valuables in your possession, you may want additional personal property coverage.
In general, liability coverage for condos starts from $100,000. The amount varies based on the specific items covered, such as fixtures and appliances.
When determining how much coverage to get, consider the legal fees if you get sued and the value of your current assets. The coverage you select should be able to cover this amount.
How Much Is Condo Insurance?
According to the National Association of Insurance Commissioners, the average cost of condo insurance is about $488 to $506 annually. The rates vary based on the location or state, the coverage amount, and the selected deductible.
How to Save on Condo Insurance
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- Compare prices: Get quotes from 3 or more insurance providers to get the best price on the amount of coverage you need.
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- Seek discounts: For instance, if you combine vehicle and condo insurance from the same provider, it may be possible to get a discount.
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- Increase your deductible: Increasing the deductible on your policy reduces the insurance premiums on your condo but also decreases your potential payout.
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Frequently Asked Questions
What Type of Insurance Does One Require for a Condo?
Condo insurance is specifically for supplementing the HOA’s or condo association’s master insurance policy. It protects personal items, built-in fixtures, and appliances.
If you get sued for negligence, or you are required to move as a result of a disaster, the insurance covers the expenses.
Do Condo Insurance Policies Cover Special Assessments?
Some condo insurance policies don’t cover loss assessments or special assessments. Make sure to read the fine print before committing to an insurance policy.
What’s the Difference Between Homeowners’ Insurance HO-3 vs HO-6?
The major difference between the two is that HO-3 policies protect single-family homes while HO-6 policies protect condos.
Since condo occupants don’t own the entire building or the land it sits on, an HO-6 policy only protects the individual unit and items inside.
Is Condo Insurance Tax Deductible?
In many cases, it’s not possible to deduct homeowners’ insurance premiums from taxes. But, if you have a home office or rent out your home, you can claim the deduction.
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