Condo Insurance Is Trickier Than You Think
There’s a lot of gray area when it comes to buying condo insurance. Who’s responsible if a fallen tree destroys your deck? What if one of your guests gets hurt at the pool? Or your bathtub overflows, resulting in water damage to the unit beneath you?To make sure you’re adequately covered, review your policy with your insurance agent each year. Insurance company experts Jonathan Farris and Pat Finerty suggest you ask lots of questions, starting with these six.1. What does my condo association cover? You and your agent need to know what your condo association’s policy covers — and what it doesn’t — to figure out just how much coverage you need on your own policy. This can vary significantly, so request a copy of your association’s master policy annually. Your agent can help decipher it. Some condo association policies cover decks, windows and the paint on the walls — and some don’t — and many will change each year. Farris of General Casualty Insurance Companies gave an example of a policyholder whose window was broken and she was stuck paying the entire cost to replace it. Her association’s policy would have covered the window the year before, but it dropped that coverage to keep costs down. 2. Are my limits high enough to cover my unit’s physical property?”Typically condo associations don’t cover interior walls, bathroom fixtures, water heaters, built-in cabinets and bookcases, fireplaces, and the like,” Farris notes. “These can be very expensive to replace, especially if you have a total loss, like a home fire.”Farris advises that condo owners consider increasing their coverage limits to protect the permanent fixtures they’re liable for, or “physical property,” that’s inside their units.3. Do I have enough coverage for upgrades I’ve made or plan to make to my condo?Most association policies exclude upgrades you make to your condo, and your personal condo policy probably only covers $1,000 to $5,000 in coverage for “additions and alterations.” Finerty of Unigard Insurance Companies says those limits aren’t nearly enough for many policyholders — though you can add more coverage as an option to your policy. Finerty gave an example of a policyholder who gutted and remodeled his entire condo. Fortunately, he had the foresight to add a half-million dollars of additions and alternations coverage. Otherwise, only $5,000 of his upgrades would have been covered in his recent claim.4. Am I covered for all scenarios where I might be liable?Generally, the association’s policy will cover liability for accidents and exposures in the common areas. However, you’re responsible for anything that happens in your unit. You’re also on the hook for damage you unintentionally cause, like the bathtub running over to the unit below you. Standard limits are typically $50,000 to $100,000, but you can usually buy higher limits.5. What if the building is damaged?When there’s a claim on the building itself, the condo association splits the cost among the owners. Typically, your individual policy will only kick in $1,000 for your share of the loss. Farris and Finerty both suggest carrying higher limits for loss assessment coverage.6. Is all my stuff covered?Your stuff is your responsibility, and many policyholders underestimate the replacement cost of their belongings. You also may not realize that certain items, like jewelry, firearms and antique silverware, aren’t automatically covered in your policy — they may need to be scheduled separately. Finerty recommends making an inventory of your belongings. This list not only helps you determine how much insurance to buy, but it can help with your claim in the event of a large loss, too.As you can see, condo insurance isn’t as clear-cut as homeowners or renters insurance. Be sure to consult your agent to make sure you and your condo are well protected.
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