A Guide to Understanding & Choosing Condominium Insurance

In 2018, approximately 5.7% of homeowner insurance policyholders filed a claim for damages.

The claim amounts vary, but some can be very costly, so you should never live without the proper homeowner’s insurance coverage.

If you own a condominium instead of a single-family home, you’ll need a different type of homeowner’s policy for your house. The type you need is condominium insurance.

People who have never lived in condos may not understand the difference between regular homeowner’s insurance and condo insurance, but there are several key differences.

As you prepare to purchase the right insurance coverage for your condo, continue reading this guide to learn everything you need to know about condominium insurance coverage.

Condominium Insurance is a Form of Homeowner’s Insurance

A condominium is a home, but it is not the same as a single-family home. Condos generally fall into the category of multi-family units, even though some are not attached to other units.

Because condos are multi-family units, they typically have a homeowner’s association (HOA) managing them.

The HOA has the responsibility of caring for specific tasks and maintenance of the properties and community, and the homeowners pay fees to the HOA monthly.

When you buy a condo, you only own part of the home. While every community has different ownership rules, most condo owners only own the insides of their houses. They do not own the exterior parts or the common areas.

As a result, condo owners need homeowner’s insurance for the parts they own, but they do not need traditional homeowner’s insurance policies. Instead, they need condo insurance plans.

A condo insurance plan is a form of homeowner’s insurance, but it provides different coverage than a traditional policy.

The Homeowner’s Association Has a Master Insurance Plan

A typical¬†homeowner’s insurance plan¬†covers a house and all the possessions the homeowner owns. The policy also provides liability coverage for accidents that occur on the property.

A condo insurance policy provides some of the same protection, but it depends on the HOA’s master insurance plan. An HOA must provide insurance coverage in the form of a mater policy for the parts of the structures they own.

Master plans come in two main types:

All-In Policy

An HOA that provides an all-in policy offers more benefits to you, as this policy is more extensive. An all-in policy protects the exterior of your unit and all parts of the unit that came with it.

It covers your lighting fixtures, electrical system, plumbing system, cabinets, countertops, and appliances. If damage occurs to these things, you can file a claim with the HOA’s master policy insurance company.

Bare Wall Policy

A bare wall policy is less extensive and only covers the exterior of the unit. It does not provide any protection for your home’s interior parts, including the parts the home came with when you purchased it.

If you experience damage to any internal part of your house, you could not file a claim with the insurance company that holds the master policy. Instead, you would need to file a claim with your insurance company.

When you buy a condo, you must ask the HOA which type they have. You can even request a copy of their master policy to provide to your insurance company.

The Master Plan Affects the Coverage You Need

As you can imagine, condominium insurance requirements are different for HOAs that offer all-in policies versus bare wall policies. The bottom line is that you need more coverage for a bare wall policy than for an all-in policy.

An all-in policy gives you more protection, which means you must buy less insurance coverage. A bare wall policy gives you less protection, so you must buy more through a condo insurance policy.

If you aren’t sure how much insurance to buy, call an insurance company. They will ask for many details about you and your home, and they will also want to know some details about the HOA’s master insurance policy.

How to Get a Policy With Enough Coverage

When buying condo insurance coverage, it’s essential to purchase enough coverage. It’s also crucial to find out the exclusions of a policy.

A typical condo policy provides coverage for the house’s dwelling and everything in it, but it might not cover damages from specific perils.

Covered perils generally include storm damage, fire, and theft. Perils that are not always covered include hurricanes, sewer problems, and plumbing leaks. You can always add extra coverage types to your policy to increase your protection.

You may also want to ask an agent how much coverage you should have. The agent may recommend basing this on two factors – the home’s value and the replacement value.

Factors that Impact the Price of Condo Insurance

The last thing to understand about condo insurance is the factors that affect the price. Insurance quotes always factor in risk and values, and therefore, every person that calls for a quote will receive a different amount.

Here are some factors that will affect the amount you pay for condo insurance:

The Location

Location is always important to insurance companies, as it tells them more about the risk level of something happening that would lead to a claim.

The Value of the Home

The costs for insuring property also vary by the value of the property. It costs more to insure a more expensive home than a cheaper one.

The Type of Master Policy

The type of master policy affects the types and amounts of coverage you need for your new condo.

Your Credit and Claim History

Your credit and claim history also play a role in the costs you pay. If you have perfect credit and no claims on your record, you will likely pay lower rates.

Insurance agents ask many questions before offering quotes, and every answer affects the costs you pay for your condo coverage.

How to Get a Free Quote for Insurance Coverage

As you can see, condominium insurance is essential if you own a condo and is similar to traditional homeowner’s insurance policies.

Would you like a quote for condominium insurance coverage? If so, contact us for a quote for coverage.