How to Understand Condo Insurance

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A condo can be the size of an apartment, but instead of paying rent, you own it.
A condo can be the size of an apartment, but instead of paying rent, you own it. (Image: high rise condo image by jimcox40 from Fotolia.com)

If you're tired of spending money each month on rent with nothing to show for it, but you're not ready for the full responsibility of owning a house, then a condo might be the right choice for you. With a condo, you can purchase your own home without the hassle and maintenance of owning a house. For example, there's no basement to flood or get refinished. There's no lawn to cut or landscaping to care for, and there's no side walk or driveway to keep clear of snow and ice in the winter or leaves in the fall. Purchasing a condo does, however, involve having condo insurance.

Talk with your complex. Different complexes that sell condo property have different regulations about condo insurance. Be sure you understand how much coverage and what type of coverage you need for your complex.

Look into the fees for your complex. You own your own condo, as well as a portion of the common area. For these areas to be insured, complexes typically collect monthly or yearly fees from residents.

Know the difference between the types of policies. Bare walls in policies only cover the exterior of your condo, while all in policies also cover interior surfaces, fixtures and additions. Cash-value policies will cover the replacement of insured items minus depreciation, which is based on how old the items are. Replacement-cost coverage, on the other hand, will cover the cost for a new version of the insured items. Your complex can let you know if there are any requirements and what those requirements are for insurance coverage. Usually, condos have insurance requirements for structural damage, but not for personal items.

Meet with an insurance agent. An insurance agent can go over all your insurance options for your condo and explain any aspects of the policies that you don't fully understand. Meet with a few different agencies to help you get a better perspective of what is available and help you understand your options more fully.

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