What Does Condo Insurance Cover?

clients signing a contract from businessmanDid you know that United States residents racked up $67 million in insured losses in 2020? And that number doesn’t include the non-covered losses for those without condo insurance or homeowner’s policies.

That means if you’re not covered, you could end up with a financial disaster after recovering from a natural disaster.

Before you call up your local insurance agent, you want to know, “What does condo insurance cover?” It depends on your policy, so let’s look at the different types of condo insurance.

Personal Property Coverage

Your condo is full of clothing, electronics, jewelry, and other belongings. Unfortunately, thieves or a natural disaster can take or destroy what you own.

That’s the bad news, but the good news is that condo insurance generally includes personal property coverage. Still, a standard policy might not protect your high-priced valuables, so speak to your insurance agent to see if you need to add on coverage.

You also need to choose between:

  • Actual cash value coverage
  • Replacement cost coverage

If your policy pays out the actual cash value, you’ll receive a check for the depreciated value of your lost or damaged property. Then, you’ll make up the difference when repairing or replacing the item.

On the other hand, you won’t have to worry about deprecation reducing the amount of money you receive if you select replacement cost coverage. Here, the insurance company will provide the money you need to fix or replace the item.

Your premiums will be higher if you go with replacement cost coverage, but you’ll save money when it’s time to file a claim. Thus, review quotes for both types of policies to see which one fits into your budget.

Guest Liability and Condo Insurance

Do you enjoy having guests over at your condo? Entertaining is fun, but the evening can quickly go sideways if someone is injured.

For example, let’s say your friend walks into your condo, trips over the rug, and injures his back. He finds out that he’s going to need expensive surgery.

Your friend might try to file a claim against the condo association’s insurance, but it probably won’t be successful. The condo association’s coverage is likely limited to common areas, so you’ll be on the hook for the medical bills. He might even decide to sue you to recoup his losses.

Fortunately, your condo insurance will protect you if this happens.

Most policies cover injuries and medical bills for guests. The policy will step in and absorb the costs, so you won’t have to sell your condo because of the lawsuit fees.

When asking yourself, “do I need condo insurance,” consider what will happen if someone gets hurt on your property. If you can’t pay out medical bills or settle a lawsuit, it’s a good idea to purchase a policy with guest liability coverage.

Dwelling or Building Property Coverage

Some policies also include dwelling, or building coverage, but that isn’t always necessary. For example, if your condo association has an all-inclusive policy, it will cover the interior of the condo. Thus, you can make a claim if you’ve experienced a covered loss.

However, if your condo association doesn’t have this coverage, you’ll have to pay out of your pocket if anything happens to the interior of your home. For instance, imagine that a fire destroys your built-in bookcase. You’ll need to pay to replace it unless you have coverage.

Because your condo association might have all-inclusive coverage, find out about its policy before getting an insurance quote. Then you’ll know if you need to add dwelling or building property coverage. If you don’t need dwelling coverage, remember that you can still get other types of condo insurance.

Additional Living Expenses

If your condo suffers significant damage, you might have to live somewhere else while it’s getting fixed. Fortunately, you can protect yourself by including additional living expenses coverage.

Along with paying for a place for you to stay, it can also cover your food and more. This can help you avoid financial and emotional stress if you temporarily relocate.

Loss Assessment

Did you know that your condo association’s insurance policy has limits and might have high deductibles? Both can affect you if you don’t include loss assessment coverage in your plan.

First, let’s consider the policy limits. Let’s say that your entire building takes significant damage, so the association makes a claim against its policy to repair it. Unfortunately, the damage exceeds the policy limits, so the association ends up billing the residents.

Second, let’s think about deductibles. It’s not unusual for condo associations to choose plans with high deductibles to lower the premiums, but then they occasionally split the deductible between residents when filing claims.

If you add a loss assessment to your policy, it will pay at least a portion of the amount you owe. It could also pay the entire balance, depending on the policy.

Condo Insurance Coverage Options

Now that you know your coverage options, it’s important to dig a little deeper to find out when your property is covered. Because condo insurance is a form of homeowner’s insurance, it covers damages and losses due to:

  • Fire
  • Lighting
  • Excessive wind
  • Smoke
  • Vandalism
  • Theft

However, it differs from homeowner’s insurance regarding exterior walls. Your condo association’s policy will pay for common areas and exterior damage.

Get a Quote for Condo Insurance

You don’t want to pay out of pocket after theft, vandalism, or a natural disaster. You also don’t want to end up paying a large settlement if someone gets hurt on your property. Protect yourself and your investment by getting condo insurance. Reach out to us today for a free quote.