Condo Insurance

Condo insurance tends to be more complex than home insurance. The reason for this is that the coverage required by a condo owner is provided not by one insurance policy but by two, and those policies are owned by different parties. This creates the potential for gaps in coverage which can leave the owner both liable in the event of a loss and uninsured (or underinsured) for that loss.

The two policies which you require coverage from are:

1. Your condo association's master insurance policy; and
2. Your own condo insurance policy.

The reason why two policies are required is that condominiums necessarily consist of property which is owned in common and property which is owned individually. The property which is owned in common includes structures and equipment such as the roof, basement, walkways, plumbing, wiring and elevators of the building, while individually-owned property includes personal possessions such as furniture and appliances. The master policy is taken out by your condo association, and it provides coverage for property which is owned in common. Your own policy is taken out by you to provide coverage for that part of your unit which is not covered by the master policy, and for your personal property in the unit.

Your policy is not therefore one which simply supplements or ‘tops-up' the condo association's master policy. It is an essential component of your total protection as it insures different risks to the master policy. Without it you would have exposure not just for property risks but also for legal liability. It would be similar to a home owner not having home insurance, and for this reason it would be a mistake to regard it as an ‘optional extra' to the master policy.

Condo Insurance Coverage

You could not sensibly obtain condo insurance coverage without referencing the master policy of your condo association. Otherwise you would be likely to end up with a gap in coverage.

Some condo associations obtain coverage for the entire unit, including cabinets, carpets and light fittings, while other associations stop at the walls, floor and ceiling of your unit, leaving you responsible for the interior furnishings such as carpets, wall coverings, cabinets, lighting, and even the plumbing and wiring of your individual unit. You may also be responsible for the interior walls and doors of your unit. So the coverage you need will depend on the coverage provided by your condo association's master policy. Always check this policy before you buy.

A potential difficulty with coverage is that the master policy may not accurately reflect your condo association's bylaws with respect to insurance coverage. In other words, your condo association may be legally required to effect a master policy which covers certain risks for certain amounts, but fails to do so by leaving some risks either uninsured or not adequately covered. In that circumstance there would be a mismatch between the condo association's legal obligations to you as a condo owner and the master policy which it had effected to protect your potential losses and liabilities. For this reason it is important not just to review the terms of the master policy itself, but to check the condo association's bylaws and to satisfy yourself that the master policy adequately meets the association's obligations to you.

In addition to the coverage provided by the master policy and a standard condo insurance policy, you may wish to obtain further coverages depending on your location and individual circumstances. Examples of optional extra coverages are:

• Scheduled personal property (for certain valuable items such as jewelry, stamps, coins and antiques);
• Flood insurance (see the National Flood Insurance Program); and
• Earthquake insurance.

The order in which you should ensure that you have adequate protection as a condo owner is therefore:

1. Check your condo association's bylaws regarding insurance coverage;
2. Review your condo association's master policy against the bylaws;
3. Effect your own condo insurance policy; and
4. Effect whatever additional coverages you may require.

Condo Insurance Quotes

Comparing a number of condo insurance quotes is the best way to find the most appropriate and affordable coverage. As independent specialists we can help you secure the right policy at the lowest available rate.

If you would like free quotes from leading companies in your state, just enter your zip code above and complete the simple form. We will arrange no-obligation quotes for you to compare, and you'll be that much closer to finding the right policy for your needs.

September 3, 2010