Condo Insurance Coverage Basics

Your condo association will have an insurance policy, called a “Master Policy”, that will cover the exterior of the building and the common areas but most likely the master policy will not cover the replacement of your interior.

The dwelling coverage of a condo insurance policy will provide protection for the sheet-rock, cabinets, flooring, and components of the condo cannot be removed; it does not reflect the value of the personal property inside.

A condo policy provides coverage resulting from these perils:

Fire and lightning

Windstorm and hail

Explosions

Theft, vandalism and malicious mischief

Riot and civil unrest

Damage from vehicles

Sudden, accidental damage from smoke

Objects falling from the sky

Volcanic eruptions

Weight of snow, ice and sleet

Accidental discharge or overflow of water from your plumbing

Freezing of plumbing

Sudden, accidental tearing, cracking, burning or bulging of a steam pipe or hot water heating system

A condo insurance policy will exclude a loss due to flood and earthquake. Flood insurance is available through the federal government’s National Flood Insurance Program & earthquake is available as an optional coverage. Click here to get details on flood insurance and earthquake insurance coverage options.

The property insurance portion of your condo insurance policy protects loss or damage to your personal property. You’re required to provide the amount that would be appropriate to insure your personal contents at.

Property used for business purpose isn’t considered personal property and limited coverage is provided. If you have more than $5,000 in property that’s used for business purposes please let me know so I can provide you an option to insure your business personal property correctly.

There are often limitations with property coverage and some property might not have full replacement cost coverage. Adding a schedule will insure your property on a scheduled basis, this means that each item is listed and described on your policy. This will provide a separate limit of insurance for each, based on an appraisal or bill of sale.

The types of property for which this coverage is used is jewelry, furs, cameras and photographic equipment, musical instruments and equipment, silverware, golf equipment, stamp and coin collections, and fine arts.

With a schedule there are:

no limitations or exclusions as the schedule will cover any type of loss other than wear and tear.

There is no deductible to pay when you file a claim with a scheduled piece of property.

An inventory of your personal belongings is a good idea. When you have to file a claim it is to your advantage when you have documentation to prove your losses. When creating this inventory provide the serial number, date, cost of purchase and include receipts if possible. An easy way to inventory your possessions is to use a video camera or take digital photos and forward those pictures to a web based email account so you can access them anywhere.

You can create a home inventory by downloading this personal organizer.

Why create a personal organizer?

Remembering all the contents of your home after a fire, theft, or other calamity is practically impossible. That’s what you’ll be asked to do when you submit a claim on your condo insurance policy, unless you previously prepared a written inventory of your possessions and property. Considering that the whole point of buying condo insurance is to obtain compensation for financial loss, why bet the farm (or your condo and its contents) on your memory, or add to the emotional loss and stress which comes from any type of loss?

If your condo is not fit to live in as a result of a loss, your condo insurance will cover your “additional living expenses”. The policy will provide reimbursement for your families household’s living expenses while you wait to permanently relocate or wait for the condo to be repaired. The dollar limit on this type of coverage is typically 20% of your condo’s personal property coverage limit. There may also be a time limit on this type of coverage such as 12 or 24 months.

An example of how this coverage works would be if your mortgage is $1,500 per month and you have a loss and it costs you $3,000 to stay in a hotel for a month you would be reimbursed for the difference in your living expenses. Also if you needed to board a pet in a kennel and eat out at restaurants this is the coverage that pays for expenses beyond what you’d normally pay for daily living.

If you or another insured are found responsible & liable for personal injury or property damage suffered by another person, your insurance company will investigate the event and might offer a settlement amount owed to that person through your liability coverage. This is only true if carelessness or negligence, rather than intentional misconduct, caused the injury or damage.

For example, you may be found negligent if a meter reader was injured by falling off your tricky cellar stairs because the railing was broken (and you knew about the situation but failed to repair it). You may also be found liable for intentional misconduct if you cut down a tree on your neighbor’s property to improve your view.

If a nonresident of the condo requires medical assistance as a result of a minor injury suffered on or near your premises, your insurance company can pay his or her medical expenses with the medical payment to others coverage. This covers necessary medical expenses incurred within 3 years of an accident causing bodily injury and would include charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, and funeral services.

 Medical payments to others does not apply to injuries of named insureds or any regular resident of the household.

 Medical payments to others is a good will payment in the hopes of preventing a larger lawsuit down the road as the payment should not be construed as admitting liability.

This coverage will cover a loss due to bodily injury or property damage within a common area of the condo development. If someone were to file a claim against the condo association, the association will pay the deductible and will be paid out up to the policy limits that the association is covered for. After the condo association policy pays out its limits then you’re responsible for payment.