Evaluating the Purpose of Condo Insurance: Why Do You Need It?

If you are thinking about moving into a condo, take note of available condo insurance options. Many condos are part of an association that provides coverage for certain perils, such as structural damage. Nonetheless, this coverage has its limits and you will likely need to pay for extensions according to your personal needs. Here are important points that you need to know about condo insurance.

Understanding Condo Insurance

While condo insurance might look similar to homeowners insurance, there are distinct differences. Usually, a homeowners insurance policy provides a wide range of coverage for damages and liabilities. However, that’s not the case with condo insurance, which only covers the cost of rebuilding the unit’s interior if damaged by a perilous event.

Since condo insurance does not cover your possessions inside your residence, you will need to extend your coverage with add-ons or an HO-6 plan to ensure such items are protected financially. Insurance can be complex, but you can simplify it by talking to an experienced insurance expert. Asking a series of questions about your personal items will help you learn how extensive your coverage needs to be.

HO-6 Policies

Condo owners typically purchase an HO-6 policy to protect their belongings. The perils covered include fire, smoke, wind, and hail, as well as lightning, explosions, theft, and vandalism. The policy may also cover the unlikely event of a driver crashing into your condo.

HO-6 policies cover damages from falling objects, bursting cold or hot pipes, and electrical surges. They also cover damage from water heaters and HVAC systems. Here are some of the most important advantages of purchasing an HO-6 policy:

  • Your personal property, such as furniture, appliances, and clothing, is covered. Depending on the value, certain items like expensive jewelry or computer equipment might require extra coverage.
  • As with a standard homeowners insurance policy, you will have liability coverage that pays for third-party injuries and damages that occur on your condo property. This coverage includes medical bills and funeral costs.
  • You will also be reimbursed for living expenses when a covered loss is so devastating that you need to find an alternate place to live. That means it will pay for a hotel, restaurants and other living expenses.
  • Some plans pay for loss assessment fees that your condo association may charge.

Importance of Loss Assessment

A typical condo policy such as an HO-6 will include loss assessment coverage. The association can charge you a fee in case its own policy doesn’t completely cover the financial losses from a disaster. However, your HO-6 plan and added coverage can fill coverage gaps so that all your belongings are protected.

The reason many condo owners carry personal insurance beyond what their homeowners’ association provides, is to gain broader protection. Before you decide on a condo insurance policy, make sure you understand the condo association’s rules so you know what customized coverage solutions to add.

Living in a condo has many advantages, especially if you cannot afford a single-family home. However, like with many contracts, you’ll need to read the fine print so you don’t overlook hidden fees. Taking control of your own personal insurance will give you better coverage. Contact us at Reardon Agency for more information on the right condo insurance plan for your needs.

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