There are two differences between renter’s and condo owner’s insurance. The first difference is in what is covered by the insurance policy. The second is whether the building tenant policy requires insurance.
It is often assumed that the landlord’s insurance covers the building and its contents in case the apartment building becomes a total loss. This assumption can lead to a disaster if the building burns down. The landlord’s insurance covers the replacement cost of the building and maybe some medical costs due to smoke inhalation, but not the loss of the contents of an apartment or the costs for temporary housing when the apartment can not be lived in by the tenant. Some apartment building leases require renters take out renter insurance but most do not require this. That means if the person who lives above you lets the bathtub overflow and the ceiling caves in on your apartment, that the tenant of that apartment may be liable for repair costs and for the loss of your personal items or temporary housing.
It is also often assumed that the condo or owners association insurance covers the replacement costs for all owners. It is imperative that every condo owner know what the association insurance policy does cover. Is the policy bare walls or all in? Condo associations require all owners to carry condo insurance. Bare walls means that the condo association insurance only covers the exterior walls and common property. That means the condo owner is responsible for replacement of inside walls, cabinets, fixtures, and personal property. The condo owner is responsible for replacement whether the fire was not his fault, the water damage was due to another condo owners broken water pipe, or if a tornado rips off the outer wall of the condo unit.
All in means that every thing attached to the exterior walls and interior walls is covered by the condo association insurance. The individual condo owner is still responsible for the personal property inside the condo unit.
Your personal property in a rental apartment or a condo town house can be worth thousands of dollars. The cost of renter’s or condo personal property and liability insurance is quite small compared to the potential losses that could be suffered if the building burned down; a burglar steals a computer you still haven’t paid for, your plasma TV, other personal electronic devices, or your DJ equipment or musical instruments; or a guest slips and breaks a hip in your apartment or condo.
A kitchen replacement can cost $35,000 and a bathroom replacement can cost $10,000. Can you afford to replace the interior cabinets and fixtures in your condo if your association is Bare Walls? You might have to do just that if the building burns down or is damaged by a tornado or an act of vandalism. You may need an additional insurance policy if you throw a party where you serve liquor. If an inebriated guest slips and injures himself inside your condo or on the common property outside your condo, you may not be covered by the condo association liability insurance or your standard condo insurance liability policy. You are considered responsible if the injured guest decides to sue because you served the alcohol.