Condo Insurance

How is a Condominium policy different from a Homeowners or Tenants Policy?  Oh, let me count the ways...

With condo developments springing up all over the place like mushrooms, practically overnight, it would appear the American Dream is changing. It seems today's folks still want homeownership, but without the maintenance (Cut the grass! Rake those leaves! To paint or vinyl side? Oh, dear, looks like the plumbing may need replacement...) Condos take on many sizes, styles and occupancies. To list a few, you can have a townhouse, garden-style, refurbished factory building, apartment complex, split farmhouse, or a stand alone dwelling in a cluster of other stand alone dwellings. The possibilities are endless.  We'll let the real estate agent help you figure out what style is right for you, and we'll just deal with insuring it properly in this article.

The primary purpose of the condo policy is to insure your belongings and the part of the structure that is "yours". Getting a copy of the Condo Association's bylaws is very important to be able to figure this out. For some its from the studs to the wall, for others it may only be the appliances, cabinets, wall and floor coverings. Every condo is different, so your bylaws are your Bible when it comes to who is responsible for what. Most Associations have limited coverage and very high deductibles on their Master policies. Most Master Policies cover nothing in the unit, so if your neighbors pipes burst, and damage your walls and floors, it's your problem, not theirs.  

Another unique coverage is Loss Assessment. Since it only costs about $10.00 for $50,000. worth of coverage (in Massachusetts), it is a very important coverage for all those uncovered expenses the Association likes to make the unit owners' responsibility.  We have also recently learned that this is the only coverage that is not based on the policy period. In other words, if the entire condo building burns to the ground in May of 2004, and the Association sends you an assessment in July 2006, and in the meantime you cancelled you condo policy because you moved into an apartment waiting for the condo to be re-built, there is no coverage for the assessment, because your policy was cancelled after the fire. (Ironically, no insurer will write this coverage for you if there is an outstanding claim, so we're waiting for the courts to fight this out. Also to consider is that most people would not think about carrying coverage on a unit that hasn't been re-built yet, especially if they are residing in another location). This appears to be the only coverage that is triggered by when the claim is made, rather than when the loss occurred.

Another thing to think about-your liability if someone gets accidentally hurt in your unit. The master policy will not respond to incidents that happen in your unit. If the unit owner is using a facility like a basketball court of golf course, and injures someone, the Master policy will not respond. Liability Coverage is included in a Condo Unit owners Form, another reason to seriously consider getting a policy.

The cost of a condo policy is relatively inexpensive, compared to an HMO policy, as well. The total value of your belongings is the biggest factor in determining the premium. The cost of liability, loss assessment, and the dwelling coverage is very inexpensive. You can always give your agent a call to get a quote, or shop around,  and if you need time to think about it some more, come back here and read this article again.