Do you have enough home insurance coverage for your condo?

By Carmen Greco on August 26th, 2010
Homeowners Insurance

Condominium-living offers a few obvious advantages: no lawn mowing, no painting window frames or cleaning out gutters.

But it places other burdens on property owners--chief among them is property insurance. A standard homeowners insurance policy for a single-family home typically covers the physical structure of the home, the property on which the house sits, as well as the property within the home.

Condominium or co-op "master" policies

Homeowners insurance is more complicated with condominiums. To ensure top-to-bottom protection for your real estate investment, you will likely need a separate insurance policy to cover the gaps in the condominium association's "master" policy. The "master policy" is the homeowners policy you help pay for through monthly association dues.

The biggest mistake, said Loretta Worters, a spokeswoman for the Insurance Information Institute (III), is thinking the condo association's "master" policy covers personal belongings such as furnishings, electronic equipment, expensive jewelry or valuable artwork. It likely won't.

"To adequately insure your apartment, it is important to know which parts of your home are covered by the condo/co-op association and which are not," Worters said.

Typically, association master policies cover the raw floors, ceilings and interior and exterior walls you share with other owners in your complex, as well as common amenities such as pools and club houses.

Consider additional property insurance for your condo

Because insurance requirements differ from complex to complex, Worters said new condo owners should study their condo association's by-laws, which will lay out what you are responsible for covering.

"Sometimes, the association is responsible for insuring the individual condo or co-op units as they were originally built," Worters said. "The individual owner in this case is only responsible for alterations to the original structure of the building. In other cases, the association is responsible only for insuring the bare walls, floor and ceiling."

Mario Morales, an underwriting manager for Met Life, said many condo owners make the mistake of skimping on coverage levels, saying a $25,000 personal loss policy may not turn out to be enough coverage should a fire destroy all of the personal belongings in your unit.

The stuff you put inside your unit--personal belongings and new installations such as light fixtures, counter tops, floor and wall coverings--generally need to be insured separately by you, said Morales.

"Take an inventory and determine what will be important for you to cover," Morales said. "Single-family homeowner insurance policies typically provide a specific amount of what your dwelling is insured for in terms of personal property. But in a condo, it's up to you decide how much coverage you need for your personal property. When you start to replace clocks, clothing, furniture and all those other items you have, it adds up quickly."

Other supplemental insurance needs

You also may need to purchase supplementary coverage if your condo is located in an area prone to floods, earthquakes or fires. Standard condo association master policies also typically have low personal liability limits, so you might want to enhance coverage in that area.

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