Learn about condo insurance requirements, deductibles and policies.
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.
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:
Condo insurance typically covers the expenses of:
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:
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.