How much condo insurance do I need?

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Couple opens moving boxes in condo

You love your condo lifestyle. Make sure you protect it with insurance.

Condo insurance is different from home insurance. While it offers many of the same benefits of a home insurance policy, condo insurance is built to help fill the gaps between your condo association’s insurance policy and your personal responsibilities for your own belongings and liability.

Do you need condo insurance? Yes. Most banks and your condo association will require it.

How much condo insurance do you need? That depends on multiple factors including what’s covered by your condo association’s insurance policy.

Next, we’ll explain how this works so you can feel more confident that you and your condo have the right financial protection in place.

How does condo insurance work?
Your condo should be protected by two insurance policies — a master policy for the building (held by the condo association) and an individual policy that you purchase that helps cover and protect your liability and personal belongings. Your individual policy will also insure any structural elements, renovations or additions that are not covered in the master policy.

What’s a master policy?
Your condo’s building management will own a master insurance policy. The master policy covers areas in the building that you share with others (think: roof, basement and walkways) for both liability and physical damage. Building management will typically pay for the master policy using part of your maintenance fees or association dues.

The master policy may or may not also insure alterations that were made to the original building, like a remodeled kitchen or bathroom. So, it’s important to closely review the master policy before you purchase your individual condo insurance policy to make sure you have enough insurance coverage.

Here are the different types of master condo insurance policies:

  • Bare wall policy. This master policy covers the exterior walls of the condo, and condo owners are responsible for insuring everything on the inside of the condo, including interior walls, floors, kitchen and bathroom fixtures and appliances.
  • Single entity policy. This master policy covers nearly everything in the building. Condo owners are responsible for insuring their personal belongings and any upgrades they make to the unit.
  • All-inclusive policy. This master policy goes one step further than a single entity policy and it also insures any upgrades or additions that are made in the unit. It’s the most comprehensive master policy.

Information on the master policy should be in your condo association’s bylaws or lease agreement. Review this information with your independent insurance agent and contact your condo board or association if you have any questions.

What’s an individual policy?
Your individual policy will provide insurance coverage for your personal possessions, anything that’s not covered by the master policy in the event of a covered loss, and personal liability.

To make sure you’re fully protected, talk to your independent insurance agent about these additional condo insurance coverages:

  • Additional living expenses. This might be included in a standard individual condo policy. Still, ask your agent about it to be sure it’s included. This coverage would help cover the cost of living elsewhere while your condo is being repaired after a covered loss.
  • Unit assessment. This coverage reimburses you if a covered loss in a common area results in all unit owners being charged the cost to repair the loss.
  • Water and sewer backup. The coverage protects your property from damage caused by sewer or drain backups, which would fall outside of a flood insurance policy. (Note: Flood insurance must be purchased separately.)
  • Umbrella liability. This is additional liability protection on top of your individual policy. Your insurance agent can help you determine if this additional coverage makes sense for you.
  • Personal contents. You may need additional coverage for your personal belongings if their value exceeds the limits in your individual policy. For example, expensive jewelry or collectibles may need additional insurance coverage.
  • Cyber and identity theft. This coverage helps cover the costs involved in recovering from a cybercrime or identity theft. It may also provide professional services to help you recover.
  • Earthquake insurance and flood insurance. If you live in a disaster-prone area, you may want to consider purchasing this insurance.

How much condo insurance do you need?
To determine how much condo insurance you need, follow the steps below and speak with your independent insurance agent to make sure you’re fully protected.

  1. Look at the master policy. Review your condo association’s master insurance policy and determine what’s NOT covered.
  2. Create a home inventory. Add up the value of your personal belongings and share this information with your insurance agent to determine if you have the right limits in your individual policy.
  3. Determine your liability risk. Take a look at your personal finances with your insurance agent to determine your liability risk.
  4. Calculate additional living expenses. Find out how much it would cost to rent an apartment in your area and talk to your agent about this coverage.
  5. Learn about the area. Ask your insurance agent if you live in a flood or earthquake zone.
  6. Consider additional coverage. Talk to your agent about the estimated cost to recover from a sewer backup, cybercrime or identity theft and whether these additional insurance coverages make sense for you.

This article is for informational and suggestion purposes only. If the policy coverage descriptions in this article conflict with the language in the policy, the language in the policy applies. For more information about Grange’s condo insurance, coverages and discounts, speak with your local independent insurance agent.

References:
- Insurance Information Institute


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