Condo Insurance Coverage Explained

Condo insurance coverage is a vital aspect of condo ownership, and understanding what's covered is crucial for protecting your investment.

Typically, condo insurance policies cover damages to your unit's interior, including walls, floors, and ceilings.

You're also responsible for insuring your personal belongings, such as furniture, electronics, and clothing.

The condo association's master policy usually covers the common areas, like hallways, lobbies, and amenities.

It's essential to review your condo's bylaws and CC&Rs (Covenants, Conditions & Restrictions) to understand what's covered and what's not.

A typical individual condo insurance policy will cover scenarios like fire and smoke, theft, vandalism, and lightning. However, it won't cover earthquakes, flooding, intentional injuries to others, and damage from underground water.

Here are some common scenarios that individual condo insurance policies will cover:

And here are some scenarios that individual condo insurance policies won't cover:

It's worth noting that some of these scenarios may be covered by your condo association's master insurance policy, but it's essential to review your policy to understand what's included.

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Condo insurance covers your personal belongings, walls, ceilings, and floors. It also provides liability coverage, which can pay out to others if you're legally liable for injury or damage to someone else.

Your condo association's master insurance policy typically covers damage to the building's exterior, such as storm damage to the roof or siding. It also covers damage to common areas, like the lobby, elevators, hallways, and tennis courts.

If a visitor slips on an icy walkway outside the front door to the building and gets injured, your association's insurance would likely cover the liability costs. This is because the master policy generally covers injuries sustained in common areas.

You should know exactly what's included in your association's master policy, as it can affect what coverage you need in your individual condo policy. Consider asking your property manager or a member of the condo board for a copy of the master policy.

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Here's a breakdown of what your individual condo insurance policy may cover:

Keep in mind that a standard condo insurance policy typically replaces your personal items based on actual cash value (ACV), meaning it will only pay the depreciated value of your item.

When it comes to understanding what's covered and what's not under a typical individual condo insurance policy, it's essential to know the basics.

Fire and smoke damage, explosions, wind and hail damage, theft, vandalism, lightning, and burst pipes are all covered under a typical individual condo insurance policy.

You may be able to buy extra insurance for some of the scenarios that aren't included.

Earthquakes, flooding, intentional injuries to others, nuclear hazards, damage from birds, rodents, and insects, wear and tear, and damage from underground water are typically not covered under a typical individual condo insurance policy.

It's worth noting that a condo association's insurance policy can cover some of these scenarios, such as damage to the building's exterior, common areas, and injuries sustained in common areas.

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Here's a breakdown of what's typically covered and not covered under a condo association's insurance policy and individual condo insurance policy:

Remember, it's always a good idea to review your policy documents and ask questions to ensure you understand what's covered and what's not.

Condo insurance can pay for hotel bills and other expenses if you can't live in your unit due to a covered event.

If you have to move out of your condo for repairs, condo insurance can cover your hotel bills, restaurant meals, and laundry expenses that go beyond what you'd normally pay at home.

A tree crashing through your condo can force you to find temporary lodging, and condo insurance will pay for extra costs associated with lodging, meals, and other expenses.

Condo insurance may pay for your travel and other expenses incurred so you can maintain your usual standard of living if your condo becomes uninhabitable due to damage or some other issue.

You can expect condo insurance to cover expenses like lodging, meals, laundry, and pet boarding if you can't live in your condo because of a problem covered by the policy.

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Liability coverage is a core component of condo insurance, protecting you from legal costs of personal injury or property damage lawsuits. Most policies provide at least $100,000 in coverage.

If someone is hurt in your unit, medical payments coverage can help with their doctor bills, regardless of whether you're at fault. This coverage generally has a lower limit than liability coverage.

Medical payments coverage can be a lifesaver in situations like a friend tripping over an extension cord and breaking their wrist in your condo. Your medical payments coverage could help with their doctor bills.

Here's a breakdown of what liability and medical payments coverage can help with:

Condo insurance provides personal liability coverage that helps if there are accidental injuries and damage to others, such as your dog biting someone or your child kicking a soccer ball through a neighbor's window.

Liability coverage protects you from the legal costs of personal injury or property damage lawsuits, and most policies will provide for at least $100,000 in coverage.

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The condo association's liability insurance policy provides coverage for common areas of the complex, such as walkways and community buildings.

A person using the walkway in a community building who experiences a slip and fall may have the condo association find itself the defendant in a personal injury negligence claim.

Condo insurance can also help with medical payments to others, covering medical expenses for minor injuries in your condo, like a guest who slips and falls on a wet kitchen floor.

The condo association's master policy generally covers damage to common areas, injuries sustained in common areas, and liability issues.

Here's a breakdown of what the condo association's master policy typically covers:

Remember to ask your property manager or a member of the condo board for a copy of your association's master policy to understand exactly what's included.

The residents of a condominium complex pay for the master insurance policy through their monthly dues. Their portion of the premium is divided equally among all condominium owners.

Residents have equal access to common areas, making them responsible for equally sharing the cost of insurance. This includes paying for the deductible when filing a claim.

A condo master policy has a deductible, and the deductible amount is spread among all condominium owners. For example, a condo master policy has a $2,000 deductible, and 20 condo owners are responsible for $100 each.

Board members are homeowners within the complex and must pay their equal portion of insurance premiums, just like all other residents. They receive no exemptions because they volunteer on the association board.

At the closing of a condo sale, the resident receives a “certificate of insurance” that shows what the condo association policy covers. This certificate gives them information about insurance responsibility and what they need to buy.

Additional reading: How to Find Out If My Condo Association Has Insurance

Dwelling and Building coverage is a crucial aspect of condo insurance. Condo insurance doesn't cover a building's exterior walls, unlike a home insurance policy's dwelling coverage.

A condo association's master policy usually covers damage to the building's exterior, such as storm damage to the roof or siding. This policy also covers damage to common areas, like the lobby, elevators, hallways, and tennis courts.

Your association's master policy generally covers injuries sustained in common areas, such as a visitor slipping on an icy walkway outside the front door to the building. The deductible on the master policy is also something to pay attention to, as it can impact how the association would pay it in the event of a claim.

Here are the two types of HOA master policies:

Dwelling insurance pays to replace the structural part of the unit that you are responsible for if a disaster, such as a fire, destroys it. This usually includes everything you are responsible for within the walls of your unit: paint, flooring, cabinetry, etc.

Some of this may also be paid for by your HOA's master policy if it's an all-in policy. An all-in policy covers the exterior and some interior of the building, including items like appliances, carpets, plumbing, and wiring.

A standard condo policy won't cover flood damage, but you can buy a separate flood insurance policy. Similar to homeowners insurance, condo insurance typically doesn't cover earthquake damage, but you can buy separate earthquake insurance.

If your association carries all-inclusive coverage, you may not need dwelling coverage on your individual condo policy. With all-inclusive coverage, your association's master policy will cover all items built into your unit, including light fixtures, appliances, and cabinets.

Some master policies go beyond structure and shared space, covering built-in property like fixtures inside the unit. This is known as single entity coverage.

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Replacement Cost is an important aspect of condo insurance, and it's worth understanding how it works. Dwelling insurance, for example, pays to replace the structural part of your unit if a disaster occurs.

A standard policy typically replaces your personal items based on actual cash value (ACV), which means it will only pay the depreciated value of your item. This can be a problem if you want your belongings replaced with new, similar items.

If you want your belongings replaced with new, similar items, you can typically buy replacement cost coverage. This is more expensive than actual cash value, but it's generally better coverage.

Replacement cost coverage means the payout will be enough to buy new items, rather than just the depreciated value of your old ones.

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Water Backup is a serious concern for any homeowner. A clogged drain or malfunctioning sump pump can send water pouring into your unit, causing costly damage.

If you have a water backup endorsement, it will pay for any resulting damage. This type of endorsement is a must-have for homeowners who live in areas prone to heavy rainfall or flooding.

A single water backup incident can lead to thousands of dollars in damages. That's why it's essential to have a plan in place to prevent and mitigate water backup.

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If you don't live in your unit year-round or it's unoccupied while you're waiting to move in, you may need vacant home insurance.

A standard policy may not cover damage to a condo that's left empty for more than 30 to 60 days.

Condo insurance costs vary widely depending on your location, coverage needs, and deductible choice. The average condo insurance cost is $455 per year, according to NerdWallet's rate analysis.

The cost of condo insurance can also depend on the insurance company you choose. Here's a breakdown of the costs for different companies, based on a 30-year-old female with a $1,000 deductible and liability insurance of $300,000:

Your state of residence can also impact the cost of condo insurance. The cost of condo insurance varies by state, with some states having higher costs than others. For example, Florida has the highest cost of condo insurance, with a cost of $483 for $60,000 in personal property coverage.

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As a condo owner, you may be wondering what policy options are available to you. Let's start with the basics: individual condo policy vs master condo policy. If the master policy covers only the structure and shared spaces, you'll likely need to add coverage for your individual unit.

Some master policies go beyond structure and shared space, covering built-in property like fixtures inside the unit. Others, called "all-in coverage", cover condo improvements and additions. If it's not covered in the master policy, you'll probably have to cover it in your condo policy.

You can add loss assessment coverage to your condo insurance policy to help pay your share of the difference if costs exceed the master policy's coverage. This is especially important if you're not sure what's included in your association's master policy.

Optional condo insurance coverage can provide extra protection for your belongings and liability. Common endorsements include building code coverage, identity theft coverage, loss assessment coverage, replacement cost coverage, scheduled personal property, and water backup coverage.

Allstate offers a range of optional endorsements, including HostAdvantage, which covers damage to your belongings during periods when you rent your condo out to others. Amica covers condos in all states except Alaska and Hawaii and offers standard and dividend policies.

Nationwide has several types of optional coverage, including extra insurance for valuables, water damage from backed-up sewers and drains, and Brand New Belongings coverage, which insures your stuff on a replacement-cost basis. Westfield provides condo insurance coverage add-ons, such as flood insurance and equipment breakdown coverage.

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Here are some common optional condo insurance coverages:

It's essential to review your association's master policy to understand what's included and what's not. Pay attention to the deductible on the master policy and how the association would pay it in the event of a claim.

State Farm offers condo insurance policies that automatically increase coverage limits to keep pace with rising costs. This feature can provide peace of mind for homeowners.

State Farm condo policyholders in most states can get a free Ting device, a smart plug that monitors the home's electrical network to help prevent fires.

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USAA is a great option for those in the military community. Their condo insurance provides up to $10,000 worth of coverage for damage to belongings by an act of war, with no deductible.

They also offer a high level of protection for loss assessments from your association to repair damaged common areas, paying up to $50,000.

An HO-3 policy is the most common type of homeowners insurance policy, but USAA's condo insurance is specifically designed for condo owners.

Their policies include unique features that cater to the needs of military members and their families.

To determine how much condo insurance you need, start by considering the cost to rebuild or repair damage to your unit. This can be a significant amount, especially if your HOA has a bare walls policy.

The cost to rebuild or repair damage to your unit can range from $10,000 to $50,000 or more, depending on the extent of the damage. It's essential to have enough condo insurance to cover this cost.

You'll also need to consider the value of your personal belongings, which can be calculated by doing a home inventory. This includes item descriptions, purchase dates, estimated values, and serial numbers and receipts (if available).

A home inventory can be done with a written list, pictures, videos, or a mobile app. Having a home inventory can be crucial for making an insurance claim for everything you're entitled to.

For an estimate of what your belongings are worth, you can use the calculator below. Consider rounding up to the nearest $10,000 to make sure you have enough coverage.

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Here's a rough estimate of the amount of personal property coverage you may need:

Liability coverage for individual condo insurance generally starts at $100,000. This is the amount you could lose if someone sues you, including the value of your savings and investments, vehicles, and other assets.

To decide how much liability coverage you need, tally up the total amount you could lose in a worst-case scenario. Then get enough liability coverage to cover at least that amount.

If you're looking to get a quote for your condo insurance, you'll want to consider the costs from different companies. Allstate offers a quote of $291 for $60,000 in personal property coverage.

The cost of condo insurance varies significantly between companies, with Erie being the most expensive at $640 for the same level of coverage. Nationwide, on the other hand, offers a quote of $273 for $60,000 in personal property coverage.

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You can also check the average costs from different companies. For $60,000 in personal property coverage, the average quote is $329.

Here's a comparison of quotes from different companies for $60,000, $100,000, and $200,000 in personal property coverage:

Keep in mind that these costs are based on a 30-year-old female and include liability insurance of $300,000 and a $1,000 deductible.