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You might think that the condo insurance that the association provides is enough protection for your condo, but it’s not. In fact, if you have a mortgage on your condo, your mortgage lender will require that you have at least some coverage of your own.
Condo associations may provide one of two types of condo insurance policies:
- All-in policy – This policy covers the exterior of the unit as well as the interior components that came with the unit, such as cabinets, flooring, wiring, and plumbing.
- Bare walls-in policy – This policy generally covers only the exterior of the unit and nothing on the interior including the components that came with the unit.
You probably noticed, neither of these policies mentioned your personal belongings. The condo insurance policy that you purchase will cover thesebelongings and more, depending on the policy.
Keep reading to learn the top five reasons you should consider condo insurance.
Your Mortgage Company Requires It
Most mortgage companies require you to purchase your own HO-6 policy. How much you must buy varies by company, but on average, expects them to require a policy worth at least 20% of the home’s value. You won’t need coverage for the full value of the condo since the association handles the exterior portion of the unit.
You Can Get Reimbursed for your Personal Losses
The condo insurance that the association provides covers the exterior of the unit and the appropriate interior unit. It does not cover your personal belongings though. If a fire wiped out your condo and you lost all of your personal belongings, the association’s condo insurance wouldn’t cover it.
The condo insurance that you purchase may cover it, though. Like homeowner’s insurance, there will be limits on each item. If you have expensive items, we recommend that you look into additional riders to cover the added expense of your luxury items.
You Get Coverage for Injuries Inside Your Condo
If someone falls and slips in the common areas of the condo development, the blanket condo insurance policy will cover the liability. But if someone slips and falls inside your condo unit, the blanket condo policy won’t cover the liabilities. This could make you fully responsible for the medical bills and loss of income the person suffers.
Buying your own condo policy may provide the liability coverage that you need to protect you from financial issues as a result of someone getting hurt. As is the case with any policy, know the liability limits and the instances it would cover before buying it.
You May Get Loss of Use
If a disaster wipes out your condo completely, such as a fire or hurricane, you’ll need somewhere else to live. Just because your condo got wiped out, though, doesn’t mean you don’t pay your mortgage. Now you’ll have living expenses for two places – a condo you can’t live in and your alternate living arrangements.
Loss of use coverage reimburses you for the cost of living elsewhere while they repair your condo. This can help alleviate the financial strain that occurs when you have a total loss of use. Make sure your policy has enough coverage to accommodate you during this time of need.
Condo Insurance can Reduce the Risk of Lawsuits
Living in a condo means that you live in a community with other condo owners. One lawsuit can bring down the values of all of the units, especially if it causes the condo owner to go into foreclosure. If everyone carries the proper condo insurance, it can reduce the risk of lawsuits, which in turn can help keep the value of the properties higher.
Condo insurance isn’t as costly as homeowners insurance because you insure the interior comments of the unit only. Shop around with different insurance providers to find the policy that is affordable while providing the level of coverage you need to protect yourself.Get the right insurance coverage.