Condo Insurance

What Is Condo Insurance?

The first thing to understand about moving into a condominium is that your insurance needs differ from that of a traditional homeowner. Each condo complex has its own rules on what’s covered by the complex owners and what you need to cover yourself for your own unit.

Master policy

In a condo complex, you own your personal unit, but you share ownership of the rest of the complex with other owners. That means collectively, you are all responsible for insuring common areas, such as the pool area and the building exterior.

Make sure you receive a copy of the association’s insurance agreement. The master policy spells out what your responsibilities are. Also pay attention to how much of a condo association deductible there is and the instances when that may kick in.

Individual unit

You are also responsible for insuring everything contained within your condo unit. One way to calculate how much coverage you need is to determine half the market value for interior structures.

Oftentimes, it’s also helpful to find out how much other owners paid for recent upgrades, such as new flooring. Those numbers tell you how much money you would need to replace interior structures.

From there, decide whether you want actual cash value or replacement cost coverage. ACV reimburses for the current value of an item based on its depreciation, while replacement cost allows you to replace your belongings with new items. Most experts recommend replacement-cost coverage as the better option.

Final thoughts

Make sure you know what both your own and your condo association’s insurance covers. Find out whether you need separate coverage for certain disasters, such as floods or earthquakes.

The more questions you ask and information you gather upfront, the better protected you’ll be in the event of a disaster.