As a condo owner, you can spend your free time enjoying the complex pool instead of cleaning it, or admiring the landscaping around your home without being responsible for weeding and mowing. While condos give you the benefits of home ownership without a lot of the maintenance hassles, you still have to provide insurance for your unit and your belongings. Condo insurance resembles the insurance you’d buy for a freestanding home, with a few key differences.
A portion of the dues you pay to your condo association each month goes to maintain and insure the common areas of your condominium complex – the grounds, clubhouse, pool, hallways, roof and any other areas shared in common by all residents. Your condo association’s policy may cover the walls that make up your home, but they won’t cover the items within those walls. Some policies cover fixtures such as lamps and mirrors, as well as appliances, while others do not. Though it’s not very exciting reading, you should make it a point to review your condo association’s insurance policy. The policy will spell out what is and isn’t covered. Make note of what is covered and plan to cover the rest to protect yourself and your belongings.
Your furniture, art, rugs and collections aren’t covered by the condo association’s policy, so you’ll need a separate insurance policy to take care of them. This personal property insurance protects you if your property is damaged when pipes break or the roof leaks, or if a thief breaks in and steals your valuables. You’ll need to decide whether to insure your belongings for their cash value – the amount they’re worth today – or to pony up more bucks and spring for replacement value coverage. You may consider your vintage stereo a priceless heirloom, but with cash value coverage, the insurance company will depreciate it according to its age and condition. With replacement value coverage, you’ll receive the amount of money you’ll need to buy a new, comparable model.
If a friend slips on a rug in your condo association clubhouse and breaks his leg and decides to sue, the condo association’s insurance policy picks up the tab. If your friend has his pratfall in your living room, you could be liable. A personal liability policy protects you from losing your shirt because of your friend – or possible ex-friend’s – mishap. The policy pays any damages the court awards your friend, and the insurance company will help defend you in court.
If you’re in a flood-prone area, your mortgage holder may require you to purchase flood insurance in addition to any flood coverage the condo association already carries. You can also purchase policies that cover wind damage or damage from earthquakes. You can even purchase loss assessment coverage. This insurance pays you if your condo association assesses an additional fee to cover a loss they incurred. For example, if a fire damaged a portion of the common area, the condo association might assess a fee to all homeowners to cover any costs they had to pay in excess of their insurance coverage. If you have loss assessment coverage, the insurance would cover your share of the assessment.
Cynthia Myers is the author of numerous novels and her nonfiction work has appeared in publications ranging from "Historic Traveler" to "Texas Highways" to "Medical Practice Management." She has a degree in economics from Sam Houston State University.