What is Condominium Insurance?
Much like those who lease their homes, condominium owners have only partial responsibility in insuring their property and home. Condo associations usually have master policies to cover common areas and the physical structure of your building. However, it is the responsibility of the individual condo owners to insure their personal property and protect themselves against third-party lawsuits arising from bodily injury or property damage occurring in their home.
Condominium insurance differs from homeowners in that it doesn't need to cover the outside of your condo (roof, exterior and garages for example). Most condo insurance carriers will cover your interior walls, appliances, personal property and other valuables that you and your agent discuss. Many condo owners make improvements or upgrades to their homes, such as installing hardwood floors, new counter tops or replacing the carpet. Fortunately, most condo policies will pay to restore upgrades after damage occurs.
Arguably the most important coverage under condo insurance is for lawsuits and legal fees. These expenses can add up quickly. The average claim from 2011 to 2015 for third-party lawsuits against homeowners is estimated at $24,000, which includes both bodily injury and property damage claims as well as medical payments or other reimbursements to third-parties. While certain precautions can be taken to mitigate lawsuit exposures in your condo, you should always be prepared for the unexpected, otherwise your personal assetsincluding your condominiumcould be at risk.
What does Condominium Insurance Cost?
Condominium insurance is very customizable, with optional coverages such as for stolen credit cards or checks and costs that trickle down from master policies after the association has reached their policy limit. Working with an experienced personal insurance specialist is vital to saving money on condo insurance premiums. Many carriers offer specific discounts for such features in your condo as security alarms, smoke and fire alarms and the use of deadbolt locks. The experts at The Insurance Shop are familiar with all available discounts and endorsement options for condo insurance. Contact one of them today to find out how much money you could be saving.
Some factors that will impact condominium premiums are as follows:
- The rebuilding cost of your condo unit.
- How much your condo association (HOA) insures.
- The value of your personal belongings.
- Where you are located geographically.
- The age and condition of your condo.
- Your pets (typically named breeds by HOA that must be covered).
- Your personal claims history.
What are Common Condominium Claims?
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According to claims data provided by Allstate the following are the four most common claims filed by both renters and condo owners (as these types of policies are very similar):
- Burglary. Burglary is the theft of items from your home. The burglary rate in U.S. cities is 822 per 100,000 residents.
- Property Theft. The theft of personal property while away from home, of such items as your cell phone, laptop computer or briefcase, is nearly six times as likely than a burglary at your home.
- Fire. Claims for fire damage in the midwest have the highest average loss per capita at $46.7 million, the rest of the country ranges from $34.6 million to $43.6 million.
- Third-party liability. Injuries inside homes result in more than 21 million medical visits per year. While it can't help pay for your own family's injuries, your condo insurance could cover dog bites inflicted to your guests or if they slip and fall, etc.
How Can I Reduce My Risk?
Reducing your condo's exposures such as to fire or theft can be relatively simple. Authorities have posted tips on protecting your home and belongings. These tips include being smart on social media (careful to not publicly post when you'll be out of town for example) and using secure locks and alarms for your valuables. There are more tips for protecting your valuables while away from home, such as avoiding the use of the "please clean" doorknob sign at hotels. This sign tells thieves you are not in your room. Using hotel safes and keeping highly valuable items on your person is advised. There are also precautions, aside from smoke/fire alarms, that one can take against fire. Keeping plants watered, prohibiting smoking inside unit and keeping important documents and items in a fire-proof box are all good examples of such precautions.
Mitigating third-party liability risks by securing rugs with non-slip products, fixing loose railings or floorboards in a timely manner and keeping loose cords, toys and other fall risks off the floor will greatly reduce the risk of a visitor being injured in your home. When you work with an experienced agent, like those at The Insurance Shop, you can rest assured knowing that they have identified your specific risks and worked with you closely to get them covered.
Frequently Asked Questions
- What are master deeds, by-laws and/or proprietary lease agreements?
Master deeds, by-laws and proprietary lease agreements are documents that define the rules and regulations for your condo or co-op and its members. These documents will help you and your agent sort through who is responsible for covering which types of damages.
- What is loss assessment coverage?
Loss assessment coverage is protection condo owners can use on claims involving the building or its common areas. In most condo communities, your homeowners association (HOA) has its own insurance that covers incidents outside of your personal unit. However, these claims sometimes exceed the HOA master policy limits. If that's the case, the association may ask condo owners to step in and make up the difference. Condo loss assessment coverage can help you avoid paying out of pocket when a common area claim requires your individual assistance.
- What if my visitor is injured in a common area such as the tennis courts or swimming pool?
Your HOA master policy should provide liability coverage for common areas, however it is not wise to trust that policy to always fully cover an incident. Any costs after the master policy limits have been met will fall to the responsibility of the condo owner.