Condominium Insurance

Many people think that condominium insurance is the same thing as traditional homeowners insurance. After all, you are an owner, not a renter, right? However condominium insurance is actually a completely separate category of insurance, and therefore requires its own unique type of insurance policy.

How is Condominium Insurance Different than Traditional Homeowner’s Insurance?

Your condo association already provides you with insurance to cover damage to the exterior of your building, including common areas and landscaping. A homeowner’s policy does not have these provisions, and therefore, traditional homeowners need to purchase more coverage than condominium owners. There is obviously no sense in purchasing insurance for items that are already covered by your condo association’s insurance policy.

Why Do I Need Condominium Insurance?

The insurance provided by your condo association covers damage to the outside of your building only. If damage occurs to your property on the inside of your condo, due to, for example, water damage or smoke damage, your association’s insurance will not cover this.

Also not covered by the condo association’s insurance is loss of property due to theft. So if your home gets burglarized, you need to be sure that you are covered by your own condominium insurance policy, or you will not be compensated for the items that were stolen.

Finally, while your condominium association carries liability to protect itself from lawsuits, it does not cover lawsuits that occur on your own property due to your own negligence. So, for example, if someone slips on a wet floor in your bathroom and hits their head on the bathtub, you will be liable for their injuries. Having your own condominium insurance policy will help you avoid these often enormous costs.

How Much Coverage Do I Need?

One important thing that you need to keep in mind is that not all condo associations’ insurance policies are identical to one another. For example, while one may cover damage to the lighting fixtures attached to your unit, another may not. Therefore, it is extremely important to check with your condo association to find out exactly what is already covered (and what is not) before you purchase your own condo insurance policy.

You don’t want to double up on anything, and at the same time, you don’t want to neglect anything either. Your insurance agent will want to see a copy of your condo association’s insurance policy, and then he or she can help you determine exactly how much additional coverage you need.

Are There Different Types of Condominium Insurance?

Condominium insurance comes in two categories: 1) cash value coverage and 2) replacement cost coverage.

If you select cash value coverage, then you will receive the cash value of the items that were damaged or stolen, taking into account the depreciation of the items and the cost of your deductible.

If you select replacement cost coverage, then instead of receiving the amount that the items are estimated to be worth after their value has depreciated (that is, been worn down by time and usage), you will receive the amount that it would cost to replace that item with a brand new item today. This is the type of policy most often recommended for condo owners.