Condo Owners

What You Should Know About: Condominium Insurance

Love your condo? Protect your investment by making sure you have the insurance coverage you need

What you should know:

• To fully protect your condominium, two policies are needed – a Condominium Master Policy and an individual Condominium Unit-Owners policy.
• To protect valuable possessions and guard against unexpected liability, consider additional coverage through a rider or endorsement, or add an Umbrella Policy.
• As with other standard property policies, flood, earthquake, mud or landslides are not part of a standard condo policy, so check with your agent or company about insurance for these or other disasters.

Video: Do I Need Condo Insurance? 

As a condominium owner you may be tempted to only insuring your possessions like furniture, home electronics and clothing, similar to a Renters insurance policy. Or you may assume that your condo association provides all the necessary property insurance for your unit. In reality, a condo association’s master policy often leaves coverage gaps that you may not be aware of until it’s too late. 

Here’s what you need to know about condo insurance:

Two policies are generally required for full insurance coverage of your condo unit. 

• The Condominium Master Policy typically covers general liability, but only for the common areas you share with others (elevators, stairways and swimming pools), the shell of the building and property damage to common areas. 
• The Condominium Unit-Owners policy, which may be required by your mortgage lender or condo by-laws, covers your personal possessions and structural elements inside your unit (kitchen cabinets, for example) in the event of a burglary, fire or other peril listed in your policy. Also, like a standard homeowners policy, liability coverage and possibly additional living expenses (ALE) are included, with similar limits. 

It’s important to tailor your Condominium Unit-Owners policy to fill any gaps in the Master Policy. Take a copy of your master policy to an insurance agent, preferably one with experience in condominium coverage, for evaluation and consider the following:

• Raise your assessments and structure coverage to at least the level of the master policy deductible.
• Increase your building property coverage, which typically costs only a few dollars more month. Most condo unit owners can increase this coverage to $50,000, whereas a standard Unit-Owners Policy offers only $1,000 to $5,000 in building property coverage.
• An Umbrella Policy will offer more liability protection as well as broader coverage than what is included in a standard Condominium Unit-Owners policy.
• Two additional coverages to consider are Unit Assessment and Water Backup. Unit Assessment reimburses you for your share of charges to all unit owners as a result of a covered loss, such as a fire in the lobby. Water Backup coverage insures your property for damage caused by sewer or drain backups, which are not included in your master policy or your flood insurance policy if you have one.
• If you live in disaster-prone areas, consider purchasing Flood, Earthquake or a Difference in Conditions policy, since these are not included in the master policy or unit owners policy.
• If your condo unit is an investment property that you use for allowable business purposes, such as rental on a per-night basis, you may need to purchase a commercial property policy, as many standard personal insurance policies for homes and condos exclude coverage for the business use of the property. Check with your condo association and your insurance agent or company to make sure you know what’s covered before you rent out your condo!