A condominium combines the convenience of apartment living with the investment advantage of ownership. This form of ownership may create some unique insurance challenges.
You insurance agent offer a policy specifically designed for individual condominium unit owners. Condo Unit Owner policy is for the customer who owns and occupies (at least part of the year) a dwelling unit in a structure owned and insured by a Condominium Association, a Townhome Association, a Cooperative, a Homeowner Association, a Planned Community or similar types of organizations.
In many instances, the condominium/association entity assumes responsibility for insuring certain types of damage to the dwelling structure. When the condominium/association insures the structure, a unit owner policy is normally written to cover the unit owner.
In other instances, the condominium/association does not insure the structure. In this situation, a homeowner’s policy would be written for the unit owner, just as it would be for an insured person with a conventional home.
Why do I need?
You have chosen a popular alternative to buying a one-family home or renting an apartment.
With ownership comes the need to protect your investment through insurance. Buying coverage, however, is different for a condominium/ association owner than for owners of conventional homes or renters. That is why a special unit owners policy has been developed.
The Condominium/ Association Master Policy
- Because it can be more efficient or economical, your association may insure all the building and common elements under a single package policy, commonly called an association master policy. The three typical ways to provide coverage, all through an association policy: Insures the basic building(s) (walls, roof, floors, elevators) but leaves to you the responsibility of insuring appliances, carpeting, cabinets, wall coverings, and other items in your unit, and in some instances the interior walls.
- Insures both the basic building(s) and the items within your unit other than personal property.
- Insures both basic building(s) and includes unit owner fixtures and improvements.
When an association master policy insures some of the buildings, a condominium unit owners policy provides coverage for:
- Items not covered by the association master policy that may be your insurance responsibility.
- The value of building additions or alterations made by you, at your expense.
- Value added (If you’ve put in a better quality carpet than was originally there, for example, this coverage would make up the difference in case of loss).
- Damage to your unit not compensated because of the master policy deductible.
If this sounds a bit complicated, it is. Building coverage is one of the more complex parts of insuring an association. You should discuss your needs fully with your agent.
Your Personal Property Coverage
Because you have a large investment in your personal property, you need enough coverage to compensate you if you suffer a covered loss.
One study has found that many condominium/ association unit owners are underinsured in terms of their personal property.
Whatever type of association you live in, a good way to be certain you have adequate coverage is to complete an inventory of your possessions and their purchase date and price. Some insurers have inventory forms available to assist you.
Put your inventory listing in a safe place outside your home. Photographs or video will supplement your inventory. To speed up your claim settlement if you have a covered loss, save receipts for major purchases.
Check to make sure your policy has an inflation-guard feature — one that automatically increases coverage for belongings.
Other Special Needs
If you operate an office or small business in your home, you may need special coverage. Check with your agent if you have a home business. This will help make sure that you have the right kind of coverage.
Putting it all together
Condominium/ association living has grown in popularity and the insurance industry has responded by providing a broad selection of coverages and policies. Remember, however, that conditions in condominium/ association bylaws and other governing regulations may vary widely. Be certain that your policy covers any potential gaps in the condominium/ association master policy.
Discuss these needs with your insurance agent — someone you most likely already trust for you car, life and health insurance needs.
Don’t delay. The best protection against financial loss is well-planned coverage of your home and your possessions.
Differences with the standard home insurance policy
A unit owners policy is usually appropriate for the individual condominium/association unit owner when the association insures the physical structure. It is somewhat like a standard home insurance policy, with some differences.
How it’s similar
- Coverage A, Building Property, protects your items of real property which are a part of your unit and your responsibility according to the governing rules of your Condominium/ Association.
- Coverage L, Personal Liability, can help protect your assets in case you are legally responsible for property damage or injury to others.
How it’s different
- The unit owners policy can help you meet certain obligations that arise from your shared responsibility within the Condominium/Association.