Why Do You Need A Condo/Co-Op Insurance Policy?

Condo/Co-Op Insurance Policy

For most people, buying a home is considered the most expensive purchase in their lifetime.

Owning a condo or a co-op apartment is a significant event and you want to know how your own condo/co-op insurance policy would help you in the event of a disaster?

Why Do You Need Personal Condo/Co-Op Insurance?

If you own a condo or co-op in a building, the physical structure for the property is covered through the master insurance policy or homeowner association policy.  A portion of your association fee contributes to purchasing the master insurance policy. However, the building’s insurance doesn’t cover everything.

The master insurance policy will cover common areas, roofs, hallways and elevators, but it will not protect the interior portion of your unit or your personal possessions like electronics, clothing, furniture, etc.

In addition to the property coverage, your own Personal Liability protection comes from your condo/co-op insurance policy.

The type of insurance that your condo or co-op association holds impacts you as well. Prior to closing on the unit, request a copy of the building’s insurance policies.

I can help you go over the master insurance policy for the building so you can determine the best options when buying condo or co-op insurance.

What Does Your Own Individual Condo/Co-op Insurance Policy Cover?

An individual condo insurance policy is often referred to as an HO-6 policy.  Below are some of the coverage highlights:

  • Personal Liability – Protects you and your family against lawsuits or claims for property damage or bodily injury.
  • Additions & Alterations (interior portion of your unit) – Protects your floors, walls, bathrooms and built-ins.
  • Personal Property – Movable items like clothing, furniture and electronics.
  • Loss of Use – Covers additional living expenses if your structure is uninhabitable.
  • Medical Payments (to others) – intended to cover small claims for an injured guest.
  • Loss Assessment – provides coverage for certain kinds of losses where the condo or homeowners association (HOA) would ask you to pay for your share of damages that are either not covered under the building master policy or exceeds the existing coverage on the building or HOA insurance policy.

5 Things To Consider When Buying Condo and Co-op Insurance

  1. What is the total square footage of your unit and how recent are the updates to the interior? – Coverage limits for your interiors should be based on a replacement cost valuation, not purchase price.  The insurance company will help to determine a price per square foot to replace to the same like, kind and quality as it was before.
  2. Determine how much personal property coverage you need. – Take inventory of your belongings.  In the event of a loss, it will make it easier for you to replace your possessions.  I recommend using your phone or device to record what you own.
  3. High-End Valuable Items Should Be Insured Separately. – Most Condo/Co-op policies only provide a minimal limit for jewelry.  That limit is also subject to a deductible.  Make sure you’re protecting valuable items (such as a watch or engagement ring) by insuring those pieces separately on a Valuable Items policy.
  4. Primary Residence or a Secondary Residence? For personal use or rented out to others? – Insurance matters when you have a claim.  If your policy has been misrepresented to the insurance company, they may try to deny coverage.  Some policies also include vacancy provisions or other limitations aimed to reduce the carrier’s exposure to a loss.
  5. Renovations after closing. – If you are planning on doing renovations, you should let your broker know the following:

– What work will be done?

– Cost of construction?

– How long will the construction take to complete?

– Will you be living there during the renovations?

All insurance carriers are different.  Each company has their own nuances with their policies and should be discussed with an insurance professional.

If you any have questions, I can help you determine how best to proceed with securing insurance.