Condo Insurance: How Much Coverage Do You Need?

Buying a condo is a major investment and it would likely be one of your most valuable assets. 

It’s imperative you protect against potential losses that could affect your unit or your possessions within it. You also need to make sure you’re protected from loss if something happens to a visitor in your space.

The good news is, buying condo insurance is easy and affordable—and you can get all of the coverage you need with one policy. 

But, to get the right coverage, you need to understand how condominium insurance coverage works and you should shop around to make sure you get the best policy possible for your situation. You’ll also want to read your policy carefully to understand exactly what is covered and make sure your insurance complements any coverage provided by your condo association.

On this page:

• What is Condo Insurance?
• Different Types of Condo Insurance
• Things to Think About When Buying a Condo Insurance Policy

What is Condo Insurance?

Condo insurance policies are designed specifically for homeowners who own units that are within a condo building or that are connected to other units.

Your condo insurance policies provide protection from losses due to specific causes, which are called covered perils. For example, your policy may pay out if your unit or your personal property is damaged due to:

• Weather-related events
• Vandalism or theft
• Fire damage
• Certain kinds of water damage

Policies for condos are similar to homeowners insurance policies but provide appropriate coverage for shared living spaces. The policies are designed to complement coverage provided by your condo association for common areas and can also cover perils that come from having close neighbors—such as flooding from a plumbing problem in the condo above yours.

Different Types of Condo Insurance

Condo insurance coverage provides multiple types of coverage you need when you own a condo building. Your coverage should include:

• Coverage for damage to your unit: This is usually provided somewhat by your condo association who is required to insure common spaces and often the building’s structure. For example, your association may pay for roof damage. However, you may be responsible for covering property damage to your individual unit, such as if your washer floods and you need to replace the floors and drywall.
• Personal property coverage: This covers all of the possessions you have in your home. If your furniture or other personal possessions are damaged, the policy may pay out for repair or replacement. Your property is also covered if something happens to it away from home, such as if your laptop is stolen from your car. However, there are limits on personal property coverage. If you have particularly valuable jewelry, art, or other expensive possessions, you may need to buy optional additional coverage.
• Liability protection: If someone comes to your unit and is hurt, they could sue you under premises liability laws. Or, if your dog bites someone, you could be sued. The personal liability protection in your condo insurance policy may pay for legal defense as well as any damages you pay as part of a settlement or as a result of a judgment against you. You’ll be protected from loss for a lawsuit for injury on your property, up to policy limits.

You need to understand how your policy works to make sure you have the right coverage. Many condo insurance policies are actual value policies, which means the policy only pays for the market value of your property after taking depreciation into account.

If your condo had a fire, an actual value or market value policy would pay out based on what the destroyed property was worth at the time. So, if your TV was 10-years-old and worth only $100, the policy would only pay you $100 for the damaged TV—even if buying a new TV of a similar size would cost you $800. 

If you want to make sure you can actually get enough money to replace your possessions, you should get a replacement value policy. While these policies have slightly higher premiums, they’re often worth it because it can be impossible to buy items similar in market value to the possessions you might lose in a disaster.

Things to Think About When Buying a Condo Insurance Policy

When buying condo insurance, there are a few key things to think about to make sure you get the right coverage.

• Make sure you get enough coverage: You want a policy that covers many different perils and that provides a sufficient amount of coverage to replace or repair your unit and personal possessions in the event of a disaster.
• Consider the deductible: A policy with a higher deductible will usually cost less, but you’ll have to come up with more money in the event something goes wrong. If you have a $1,000 deductible and $5,000 in losses, the insurer would only give you $4,000 and you’d have to pay the deductible amount. If you had losses of less than $1,000, the insurer would pay nothing.
• Make sure to understand what is covered: Read your policy carefully for exclusions. While your policy may cover water damage, for example, this may be limited only to damage from things such as a burst pipe—you may have no coverage in the event of a flood caused by rain.
• Condo association requirements: Your condo association may require you to have a certain amount of protection. You’ll need to comply with these mandates.
• Consider bundling coverage: You can often get discounts on coverage if you buy multiple policies from the same insurer. For example, you could get a cheaper policy if you buy condo insurance and auto insurance or life insurance from the same insurance company.
• Know what you need to make a claim: If you have personal property coverage and something is damaged or destroyed, you’ll need a home inventory and proof of purchase—such as receipts —to get a full payout from your insurer for the possessions in your home.

>> Read More: Best Home and Auto Insurance Bundles

You should get covered as soon as you buy a condo because you never know when something could go wrong.

You Need the Best Condo Insurance for Your Needs

When you own property, you need insurance to protect your investment. Consider different insurance companies and try to get multiple condo insurance quotes in order to find a policy that’s right for you. Be sure to consider the financial ratings of companies as well as their availability of customer service, as well as the cost and coverage limits.