How to Buy Condominium Insurance

Most unit-owners believe when they purchase their condominium that the monthly association dues they pay goes toward a master insurance policy that protects everything they own. In reality the master policy may or may not cover the individual condominium unit, may only cover general liability for public areas, and is unlikely to provide any coverage for the unit owner's personal belongings.

Difficulty: Moderately Easy

Instructions

1. 1) Ask your realtor or property manager for a copy of the condominium association's bylaws. These are the guidelines everyone must go by that lives there and will include what portion of the buildings, grounds, and exposures which are covered by the master insurance policy.

2. 2) Your objective is to find out how much of your individual unit is covered by the master policy and what you are responsible for insuring.

3. 3) Contact your insurance agent and discuss what you are responsible for insuring. Decide on an amount of coverage to cover the unit itself and how much personal belongings coverage you need.

4. 4) Request replacement cost coverage on your personal belongings so you aren't limited to settling for actual cash value. As prices on most goods rise over time you could end up not receiving enough to buy new items to replace the ones lost in the claim.

5. 5) Consider your personal liability. You might be more susceptible to lawsuits since your neighbors and their visitors will be in closer proximity than in a single family home on its own lot. Ask your insurance agent to quote higher limits of personal liability for your policy and purchase the highest you can afford.

Tips & Warnings

• 1) If you have an attorney you use regularly let them review the bylaws to give you a professional opinion about what you should be insuring on your individual policy. Or you can contact the agency that handles the association's master policy to have them explain what is covered.
• 2) Ask if your current automobile insurance carrier also offers condo unit-owner's insurance and if a multi-policy discount is available. Ask if there are additional discounts available that you may qualify for such as central fire & burglar alarm systems, sprinklers, fire extinguishers, non smoker, claim-free, etc.
• 3) Ask what the policy doesn't cover and consider adding those items like flood, earthquake, and backup of sewer and drains.
• 4) Many condo-unit associations' master policies only cover the exterior of the unit and the unit owner is responsible for everything from "the studs in". Think of the thousands of dollars of fixtures, cabinetry, floor and wall coverings even the most basic of units might have that aren't covered by the master policy.