What Is Condo Insurance?
Condo insurance, also known as HO-6, is a coverage policy for financial protection against damages to your condo unit. It helps protect your condo and its belongings if they are stolen or damaged by disasters. This policy helps to cover repair and replacement costs. Though condo insurance is also a type of homeowners insurance, the extent of coverage differs from a standard home insurance policy. Most homeowners use the HO-3 policy, while renters use the HO-4 policy. Your mortgage lender may require you to purchase condo insurance to cover the duration of your loan.
How Does Condo Insurance Work?
Condo insurance generally covers all your personal belongings and living expenses, in case your condo becomes uninhabitable after a disaster. It also covers personal liability if someone sues you for negligence. The coverage offered by your condo insurance depends on what is included in the condo association’s master policy. This master policy may be of three different types: Bare Walls, Single Entity and All-in Coverage.
- Bare Walls policy includes coverage for your condo structure and the common areas within your condo building.
- Single Entity insurance extends beyond the bare walls policy. It also offers coverage for built-in property such as fixtures or installations in individual condo units.
- All-in Coverage policy covers all fixtures, installations, and additions to a condo’s interior. It is the most comprehensive form of condo association’s master insurance policy. It applies to all property owned by the condo association or such property that is part of the condo’s structure.
Most Condo Insurance Policies Cover Damages Caused By:
Fire
Wind
Hail
Theft
Vandalism
Lightning
Burst pipes
What Does Condo Insurance Cover?
Depending on your condo association’s master insurance policy, the following are the different types of coverage included in condo insurance:
- Personal Property
This policy will repair or replace your personal belongings, including furniture, provided they were damaged by any of the covered perils. However, if your personal belongings include valuables (such as jewelry) that exceed the limit of your existing policy, in that case, you may need to purchase additional coverage.
Personal property coverage can be of two types:- Actual Value Coverage: It pays you up to the current value of a lost item and therefore is more affordable. However, if you own a piece of decade-old furniture, the actual value reimbursed may not be enough for a standard replacement.
- Replacement Cost Coverage: Though it costs more than the actual value coverage, this policy guarantees you a full-value replacement of lost property/belongings.
- Loss of Use Coverage
If your condo becomes uninhabitable for any reason, this policy will cover the costs of renting a temporary residence. This ensures that you aren’t left stranded or have to pay out-of-pocket for damages caused by any covered perils. - Medical Expenses & Liability Costs
This policy provides for the hospital bills of a guest or visitor who sustains an injury on your property. If the guest sues you for damages caused by bad flooring or an aggressive pet, condo insurance covers the liability costs. It is important to choose a provider that covers your specific breed of pet.
Who Needs Condo Insurance?
Purchasing condo insurance is mandatory when you get a condo on loan. This is to protect your lender’s interest in the event of any damage to the property. However, depending on your unique needs, you might either opt for an all-in coverage, bare walls coverage, or single entity coverage.
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