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Condo Insurance

Learn about condo insurance requirements, deductibles and policies.

Condo insurance usually includes debris removal, reasonable repairs, credit card coverage and flood insurance. [©Jupiter Images, 2009]
©Jupiter Images, 2009
Condo insurance usually includes debris removal, reasonable repairs, credit card coverage and flood insurance.

Just as a condo differs from a house, condo insurance is not the same as homeowner's insurance. Because the condo owner does not own the entire complex, some insurance obligations for common areas are collective, which means they are shared. MSN Money explains that condo insurance differs from regular homeowner's insurance because the condo owner usually is not required to insure the entire condominium; some of the insurance will be covered by a larger insurance policy carried by the complex. Condo owners should take care to thoroughly read their condo association's insurance agreements in order to best determine what additional elements they need their own condo insurance to cover.

Condo Insurance Requirements

In Wisconsin, condo owners do not have to purchase building insurance on their own, but they should purchase insurance coverage for improvements, fixtures, alterations and appliances -- basically everything within the four walls of the condominium. They may also want to purchase personal property insurance coverage in the event of loss.

Other special types of condo insurance include:

  • Personal liability coverage. This covers accidents on the property and any damages that courts order people to pay.
  • Additional living expense coverage. This insurance coverage pays for condo owners to move to another building in the event that their condo is rendered unlivable.
  • Loss assessment coverage. Sometimes condominium associations levy assessments onto condo owners for the costs of litigation on common property. If someone is injured on the common property and courts award damages, assessments may be imposed to cover the gap between the association's liability coverage and the damages. Loss assessment coverage pays the condo unit owner's portion of that cost.
  • Cash value or replacement cost insurance. Some insurance agents will estimate half the market value of the interior structures in determining a policy. People need to determine whether they want cash value or replacement cost insurance. Cash value replaces the value of the missing items minus depreciation. Replacement cost insurance provides a check to replace the old item with a new item. Depreciation is not a factor.
  • Content coverage and water backup coverage. Content refers to items that are not part of the condo structure, which includes carpeting and cabinetry. Water backup coverage protects condo owners from water damage in the condo under certain circumstances.
  • Other coverage. Consumers can also purchase coverage for things excluded from the condo association policy, such as windstorms.

Condo insurance typically covers the expenses of:

  • Debris removal
  • Trees, plants and shrubs
  • Reasonable repairs
  • Credit card coverage
  • Flood insurance

Condo Association Insurance Requirements

Some government bodies require condominium associations to obtain insurance coverage for common areas, such as parking lots, lobbies and walls shared by two or more units. The individual condo unit owners then pay maintenance fees that cover the cost of that insurance.

However, insurance paid for by maintenance fees does not cover costs associated with damaged property inside units. Homeowner's insurance can be purchased to pay those costs as a supplement to the association policy. Walls shared by two or more units are generally considered common areas. Appliances such as air conditioning units that are outside the building but are for the use of one unit are typically the owner's responsibility and have to be separately insured. However, it's important for condo owners to check with their individual associations, as requirements may differ from building to building.

Condo owners considering their insurance needs should read the master policy, which should detail which areas of the condominium complex are covered by the association's insurance policy.

Master policies generally fall into two categories:

  • Bare walls in. Policies that cover a person's property inside the individual condo unit, but do not cover fixtures and features such as countertops and flooring.
  • All in. Policies that cover everything, including fixtures and installations. Some condo owners do not need much individual coverage because their association policies are of this type.

Deductibles on Condo Insurance

Condo unit owners should also read the condo association insurance policy to determine what their deductible is in the event of a major loss. They would be responsible for a portion of that deductible along with other condo unit owners. The trend has been toward high condo deductibles, sometimes as much as $25,000. Condo owners should ask for the association insurance agreement at the time of purchase and obtain a copy in writing.

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