WHY BUY CONDO INSURANCE?
There are several reasons to buy condo insurance.
- It covers your personal property, the contents of your condo, aka: your stuff, against fire and theft and other losses.
- It may be required by your finance company as a condition for your loan.
- It can provide coverage for you against personal lawsuits.
- It can protect you against a surprise bill from your HOA for obligations you have as a condo unit owner that you didn't know about.
- It's cheap.
Sounds great, eh? Well, the other thing is that condo insurance can be very complicated so here's what you need to know.
The primary coverage on a condo policy (designated as Homeowner Form HO6) is the Contents Coverage, referred to as Coverage C on your policy. It is the value of all your personal stuff in the condo. It includes your clothes, linens, electronics, rugs, furniture, drapes, decorations, appliances, bedding, china, dishes, silverware, cutlery, pots and pans. Everything. Get an idea of what the replacement cost of all that stuff would be. Just ballpark it to begin with. You are buying protection for your personal possessions against damage from Fire, Theft, Wind, Hail, Storm, etc.
Replacement cost means just that; what will it cost to replace it, new for old, not the garage sale value. If you have a twelve year-old TV, it's not worth much but the cost to replace it may be $1,000. That will be your replacement value. Come up with a figure to replace all your stuff in the condo.
Dwelling or Additions and Alterations coverage. This will be referred to as Coverage A on your policy. With condo insurance this coverage refers to the portion of the interior that you are responsible for replacing in the event of interior damage. Your Home Owner Association should be able to tell you or show you in the CC&R's what your responsibility is to replace interior construction if there's fire damage, for instance. Often the condo owner's area of responsibility is described as "Wall in". In other words you are responsible for replacing everything from the wall in. Pretty vague, isn't it. It almost always means that you are minimally responsible for replacing the wall covering, floor covering, cabinetry, fixtures. Sometimes it includes rebuilding the entire interior, including drywall and water pipes and electrical cable, etc. that is contained in the interior walls of your condo. That's a lot. Get it clarified with your HOA.
Comprehensive Personal Liability Protection covers you against lawsuits made by persons who feel you have injured them as the result of your negligence, such as leaving a hose across the sidewalk that causes a person to trip, fall and sustain injury.
Loss of Use coverage will pay you for the additional room and board and living costs if you are turned out of your home as the result of damage covered in your policy, while the repairs are being done, after a fire, for instance.
Loss Assessment coverage is peculiar to Condo policies. If there is damage to the common areas of your condo, such as pool or club houses, then each condo unit owner will be assessed a portion of the damage (the loss) that isn't covered by the master policy. So you may get a surprise bill one of these days. How much could it be? Ask your HOA. They should know what is and is not covered on their master policy and how the cost would be divided up.
When you own a condo you are responsible for insuring what is inside. You must provide insurance for your personal possessions,of course, but also for portions of the interior structure of your condo in the event of structural damage. Your condo association provides insurance for the exterior of the building, called the Master Policy, but not the interior, fixtures, cabinetry or even interior walls. Make sure you are covered. Generally associations only cover the outside of the building, the unit, common areas, and any fixtures to your condo.
If you have good credit and your building is less than 30 years old, you can get a quote and buy your policy right away with Safeco by clicking this button.
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