Whether you’re buying your first home, looking to downsize, or retiring somewhere else, understanding condominium insurance coverage is important. Especially now with the impacts of inflation.
Master Policy Coverage
Most condo/homeowners’ associations (HOAs) have what’s called a master policy which provides coverage for the exterior of the building and common areas. Common areas may include hallways, elevators, gathering rooms, and pools. Losses covered by the master policy are storm damage, fire, and liability exposures like slip and falls in the common areas. The master policy won’t provide liability, structure, or contents coverage for you and your unit.
Condominium coverage is very different from Homeowners as the structure coverage doesn’t offer replacement coverage or have an inflation factor built in. As a result, you may not have enough coverage in a loss situation. If you’re wondering, what can you do, check your HOA documents to see what coverage the master insurance policy provides. Most common is either “bare walls in” (responsible from studs in) or “all in” (responsible for mostly just personal property). There are some variations to this which is why import for you to review the HOA. With this information you can have a conversation with your agent about getting the best coverage.
Contents is all the furniture, dishes, clothing, and anything else you have brought into your condominium. This is easily the most underestimated coverage. Most of us don’t realize how much it would cost to replace everything in our home, condominium, or apartment after a total loss. My recommendation when selecting this coverage amount is to think of buying everything without any sales, paying full price. When doing that don’t forget to include unique or expensive items like jewelry, artwork, musical equipment, and more.
All of us are looking for ways to save money and HOAs aren’t different. One of the easiest ways to reduce insurance cost is to take higher deductibles. HOAs are considering $5,000, $10,000, $25,000, or higher. What that means for you is after a loss you can be assessed for the cost. Good news is your condominium policy will usually come with some coverage called Loss Assessment, and you have the option to add more. Our recommendation is again to review the HOA’s master policy to decide how much coverage you should have.
For more information or request a quote please call us at 515-576-4321.