A common misconception among condo owners and residential renters is that if the building is insured then they are protected from potential loss. When it comes to insurance, knowledge is power! Once you realize that your personal belongings are not covered by the insurance that protects the building, the only thing left for you to decide is whether or not you have anything of value that you would like to be insured against loss.
The desired outcome of purchasing an insurance policy is to make you whole financially in situations that would otherwise leave you unprotected. There are a variety of insurance plans designed for many different situations, all carefully created as a safety net to protect the purchaser in case the unthinkable occurs. Condo owner’s insurance and renter’s insurance are similar types of policies, yet should be understood separately in order to know which is the right one to purchase.
Condo owner’s insurance is also known as the HO-6 policy, while the renters insurance policy is known as the HO-4 policy. They both protect the policy holders personal property from a wide range of hazards including fire, theft and smoke. Another similarity, and false assumption regarding these types of policies, is the fact that floods and earthquakes are not covered by these types of insurance. In some cases it is possible to buy a separate policy or rider for these situations, but it is important to know your situation and risk when speaking with your agent. Certain liability situations are also covered by both properties. For example, if an accident occurs within the home, the policy holder may be protected from liability claims that could otherwise be devastating.
Another common question for your agent revolves around the actual act of making you financially whole after a loss has occurred. Will your agent be offering actual cash value for your personal belongings, or will you be restored financially with the replacement cost of your goods? Actual cash value will provide you with compensation relative to what your goods were worth at the time of loss. Replacement cost would provide you with financial compensation in direct correlation with what it would cost to buy the goods new from a store.
Condo owner’s insurance provides additional coverage for replacement of permanent attachments or added fixtures inside the dwelling. This is important because a condo owner tends to consider their residence a long term home and will be likely to make upgrades suited to their lifestyle. On a related note, any structural parts of the building that are owned personally are protected. In addition, it is not uncommon for a condo owner’s association to charge a cost of common property loss if damage to a jointly owned area occurs. In these cases condo owners insurance would protect the policy holder from paying a larger than necessary amount of money out of pocket to their association.
Choosing the right policy is a critical step in protecting you and your belongings from loss, but once you make that choice then you can remain confident in the knowledge that you are protected from the unforeseen.