What Does Condo Insurance Cover?
If you own a condo, it’s important to have condo insurance. This is different from the association’s insurance, or the master policy. The master policy covers things like the roof on all condos in the development, as well as any shared or common areas. Some master policies do cover the structure of each condo unit, but every policy differs, so it’s important to know the details.
Regardless of what your master policy covers, carrying condo insurance is a good idea to protect you even further than the master policy covers. Keep reading to learn just what condo insurance covers.
Every time you have someone over at your condo, you are responsible for their wellbeing. Let’s say a friend came over to your condo and she slipped and fell on your kitchen floor. She broke her arm and wants you to pay for the damages. Rather than you forking over the cash, she can file a claim with your insurance. The personal liability coverage may cover the medical bills your friend owes as well as any legal expenses, should it get to that point.
Chances are that the master policy on your condo only covers the exterior portions of the condo. If a storm, fire, or other peril damages the interior parts of your home, your condo insurance may cover it. The damages will only be covered if the issue that caused the damage is something that is covered under your insurance, though.
Your condo insurance should also cover your personal belongings. Be careful with this portion of your insurance, though. Each policy usually has a dollar limit regarding the amounts they will cover. If you have valuables that exceed this amount, you may have to take out separate riders to ensure that you have adequate coverage.
Another thing to watch out for with the personal belongings coverage is how the insurance company will figure out what you lost. They use two values –actual cash value and replacement cost value. Actual cash value takes into consideration the depreciation of your items. In other words, you may get less money back for these damaged or stolen items than you paid for them.
If you have replacement cost value, the insurance company will reimburse you the amount of money it takes to replace the item at today’s costs. For example, if a piece of jewelry you bought 10 years ago were stolen from your condo, the insurance would cover the cost of purchasing the ring today rather than the depreciated value of the ring.
This is a little-known fact, but your condo insurance might cover your expenses if you are a victim of identity theft. The cost to add this coverage to your policy is usually minimal, but it can save you thousands of dollars should you have to use it.
Loss of Use
Finally, your condo insurance should provide coverage for loss of use. This means if your condo becomes uninhabitable because of a covered peril (storm, tornado, fire), the insurance company will help you pay another place to live for the time being. This can relieve the financial stress you experience as you figure out how to move forward.
As you can see, condo insurance is important. Without it, you put yourself at risk for a great number of liabilities. While you can’t predict whether you will need the insurance or not, it’s usually better to be safe rather than sorry.