Condos are often purchased, rather than rented. But did you know that a condo owner can't purchase homeowner's insurance for their property? There is a difference between condo insurance and homeowner's insurance, and it is important to understand that before you purchase your dream condo.
How Insurance Works
When you have homeowner's insurance, standard policies exist that include different types of coverage. Dwelling coverage, for example, covers any damage to the structural components of a home, including the walls, ceilings, plumbing, and more.
Personal property coverage is in place to cover the owner and household members up to approximately 10 percent of the dwelling coverage limit on the home. Personal liability coverage protects the homeowner if someone is accidentally injured while in the home and a household member is legally at fault for the accident.
Homeowner's insurance also typically provides medical payments coverage and loss of use coverage as well. Payments are made to reimburse medical treatment costs following a no-fault accident on the property. Loss of use coverage covers additional living expenses, including housing and food costs.
Condos have many the same coverage types in place, but the structure of the policy is going to appear different. Instead of having several coverages under one single policy as you would with homeowner's insurance, you will have condo insurance that is split into two different policies.
Understanding Condo Insurance
Condos are considered both communal and individually owned property. Because of this, the condo association has the added responsibility of the shared building components, including the insurance.
The condo association's master policy often contains the coverage for structural damage, and all other coverage types will be in the second policy that each individual condo owner purchases.
Determining Condo Insurance
If you have an independently owned home, then you can customize your homeowner's policy based on your needs and preferences. Condo owners, however, have to modify the choices based on what kind of coverage the condo association carries.
The condo association will have two different types of reimbursement: full replacement cost or actual value cost. Full replacement applies to all covered elements with the full cost for repair or replacement. Actual value cost takes depreciation into account when determining how much will be paid out on the policy.
Single Condo Units
Master policies vary depending on what the association covers. An All in One policy, for example, covers several things, including plumbing, HVAC systems, appliances, flooring, cabinets, countertops, and interior condo walls.
A single entity master policy covers the original fixtures in the condo, and a Walls in master policy covers only the outer walls of the condo.
As you can see, there is a lot you will need to consider before choosing between purchasing a condo or a stand-alone home. For more information on homeowner's insurance and other insurance policies you need for your home, contact the experts at Panorama today.