Do you actually know what is and isn’t covered by your condo (HO-6) policy? Condos are a special breed of insurance, because they function like a hybrid between homeowners and rental policies. Your personal policy works in tandem with the homeowners’ association master insurance policy, which can create some confusion when it comes to coverage and exclusions.
Let’s take a look at what your standard condo insurance likely includes and excludes, so you can ensure that you have the right coverage in place for your needs. That way, if something were to happen, you won’t have to wonder, “Is *this* covered by my condominium insurance?”
What Condo Insurance Covers
Here’s the basic rule of thumb. Your condo insurance covers anything within your condo walls. The HOA’s master policy covers everything outside your front door.
Here’s what your condo insurance (HO-6) policy usually covers:
1. Liability: If guests are hurt or their belongings are damaged within your condo, your liability coverage will help pay their bills and any lawsuit costs. It would also cover your personal liability if someone in your household damaged someone’s property or person—even while not in the condo. Get more info on condo liability insurance here.
2. Personal property: This will cover the cost of repair or replacement for belongings included on your home contents list. So, if your TV is stolen or your couch gets damaged, this can help cover the costs of the belongings themselves. Check on whether you have replacement cost coverage or actual cash value. You’ll likely want to pay up for replacement cost, since that will pay to replace your belongings with items of like kind and quality, not at their depreciated current value.
Certain belongings are excluded, which we discuss in the section below. Belongings listed on your contents coverage can still be covered if physically taken off the condo property, like if your laptop is stolen from a coffee shop. Usually this off-premises coverage is limited to a percentage of the total personal property policy, usually 10 or 20%. Learn more about personal property coverage here.
3. Interior structure: You own all of the structures inside your condo, like the flooring, inner walls, countertops, and fixtures. Interior structure coverage will help pay for replacement or repair if a covered peril, like vandalism or a burst pipe, damages one of these structures.
4. Improvements: If you renovate or update any of your structures, alert your condo insurance company. They’ll then change the “value” of your interior structures, so you’ll be covered for the appropriate amount for a claim.
5. Loss of use: If your home is uninhabitable due to a covered loss, like water damage or fire, loss of use coverage will provide a certain amount for additional living expenses while you’re in between homes. This can pay for a temporary rental or hotel until you can move back into your condo, up to your coverage limits. Get more info on loss of use coverage here.
6. Medical payments: If someone is injured on your property, this can help pay their medical bills if they don’t sue you. For example, a friend trips and breaks his wrist. He doesn’t want a lawsuit but wants help paying for his trip to the ER. Medical payments can help cover his costs without liability. It may also pay for injuries to anyone in your household, but usually only as supplemental to your health insurance.
What incidents and perils are typically covered by condo insurance? These are typically referred to as “covered perils.”
- Fire and explosion
- Lightning and hail
- Riot or civil commotion
- Aircraft or vehicle impact
- Falling objects, including ice and snow
- Collapse or partial collapse of building
Although this is standard, “covered perils” are different for each insurer. Take a look at your policy’s covered perils to make sure you’re fully protected. If there’s a common claim not listed in there, it is likely included in “named perils,” which we discuss further below.
HOA master policy + your policy
How do you know when you have to pay and when the HOA has to pay? What does your homeowners association master policy insurance usually look like?
The HOA’s insurance will generally cover the liability and property damage of the communal areas. This includes the exterior structure, shared land and landscaping, hallways, lobbies, elevators, gyms, pools, tennis courts, etc.
A general rule of thumb is that if it’s outside your front door, your HOA covers it.
But there are some exceptions. Let’s say that there is major damage to a communal area that exceeds your HOA’s insurance limits. For example, a hurricane destroys the community pool house. The HOA’s coverage will pay up to its maximum limit, but any additional costs will be shared among the condo owners. That means you’ll have to chip in yourself to help pay for the new pool.
Unless you want to pay for this cost out of pocket, you’ll need “special assessments” or “loss assessments” coverage. This is not usually included in your homeowners insurance, so you may need to purchase it separately.
What’s Excluded from Condo Insurance
The typical exclusions for condo insurance are similar to those for homeowners insurance:
- Sewage (sewer backups)
- Wind and hurricane
To be protected from these kinds of incidents, you would need to purchase “named perils” coverage.
Some homeowners’ associations will require you to purchase additional insurance for named perils. For example, if you live in a flood zone, they may require supplemental flood coverage. Get the scoop on condos and flooding here.
Some personal property
Some of your personal property may also be excluded from your contents coverage. High-risk, high-value items may be excluded or have a low coverage limit on them. These items include:
- Fine jewelry
You’ll likely need to purchase a “floater” or “rider,” which provides additional coverage for these specialty items. For example, you’ll usually only get about $1,000 for theft of jewelry. If your jewelry costs more than $1,000 total, you’ll need to get a rider to cover the additional cost in case all of your jewels were stolen.
Usually, your insurance company will send an appraiser to determine the cost of these specialty items. You’ll then get a separate rider for each high-value item. If the item is lost or stolen, you’ll be paid the appraised value.
Another question we often get is related to maintenance issues. For example, “will my condo insurance cover the cost of extermination?” Most condo insurance policies do not cover anything that is a result of neglecting to maintain the property, such as:
- Termites and insect damage
- Bird or rodent damage
- Rust, rot, mold
- General wear and tear
You’ll usually have to pay for your own maintenance costs for your condo.
What if the issue is a result of neglect on the part of your homeowners association? For example, the HOA doesn’t exterminate the wasp’s nest at the community pool next door, and the wasps start to infiltrate your home. In this case, if you can prove it’s caused by neglect by your HOA, they would likely be responsible for the costs. However, it might be hard to prove and they might fight back, and you don’t want to end up in a battle with your HOA.
Personal injury liability
Some homeowners’ policies offer personal injury liability, which protects the policy owner from nonphysical injury like defamation, slander, or identity theft.
This is usually not included in your standard condo insurance. However, if you are at risk for some sort of slander, either because of your work or volunteer, you can usually purchase personal injury liability as an add-on to your coverage.
Now would be a good time to take a look at your condo policy. Are you fully insured? Are all of your contents and potential perils listed? What is a named exclusion that might require supplemental insurance? Are any of your coverage limits too low and need additional riders or umbrella coverage?
There are a lot of questions to consider when it comes to your condo insurance. Don’t do it alone! An insurance agent can help walk you through your policy and choose the right limits.
Call one of our insurance advisors at (844) 522-0543 today for a free condo quote and expert insurance advice.
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