Single-family homes may be the dream for many, but not everyone wants the responsibility of homeownership. That?s why some choose the condo route. Buying a condominium remains a great way to build equity and utilize tax incentives without having to do yard work every weekend.
Whether you are simply thinking about purchasing a condo or closing the deal on one, you?ll have to consider an?important?factor:?condo insurance.
Similar to homeowners insurance, condo insurance protects your investment in a variety of ways. However, condo insurance is a bit different than standard home insurance. Here?are some facts you?ll need to know?about condo insurance before signing on for a policy.
What it covers
Just like homes in subdivisions, condominiums often require residents to pay homeowners association fees. In many cases, the homeowners association (HOA) fee helps insure common areas of your complex, such as?the building?s exterior, the community swimming pool and the fitness area.
However, it?s up to you to protect the interior of your home, and condo owners can do that with a condo insurance policy ? sometimes referred to as an HO6 policy. A?standard condo insurance policy may cover:
- Personal property: Protects the possessions inside of your condo such as furniture, electronics and clothes.
- Personal liability: Helps cover you if someone is injured in your condo and decides to sue. It also comes into play?if you accidentally injure someone away from the condo, or if you damage their property. You don?t need liability protection for accidents that occur in condo common areas ? the HOA insurance will take care of that.
- Building property protection: Covers interior features such as walls, fixtures, cabinets and other structural items.
- Loss of use: Assists?with additional living expenses in the event a covered loss leaves your condo uninhabitable.
- Medical payments: Helps if someone incurs medical expenses from an injury sustained on your property.
Standard condo insurance should protect your possessions and the condo?s interior from a variety of perils including theft, vandalism, fire, wind, lightning and more.
When the waters rise and the earth shakes
While condo insurance provides coverage for a variety of disasters, floods and earthquakes are not covered. For flood insurance, condo dwellers must purchase a separate policy through the National Flood Insurance Program.
If you are purchasing a seaside condo, this coverage is especially important. Residents of the Jersey Shore won?t soon forget the damage caused by Superstorm Sandy in 2012. When a storm surge pummels the coast, it won?t matter if you are on the first or third floor (or higher).
Depending on where you live, you also may want coverage for earthquakes. Your condo?s Master Policy will protect the building itself, but you?ll need additional coverage to protect your possessions and the condo?s interior. Earthquake coverage, often referred to as earth movement coverage, can either be purchased as a separate policy or as an endorsement (or add-on) to your coverage.
How to find a policy
The best way to find a good condo insurance policy is by shopping coverage with different insurance carriers. Insurance experts recommend shopping coverage annually to get the best price.
However, price is only one element to?consider. Coverage options and claims processes are other items you?ll want to pay attention to. It?s also a good idea to speak with friends and family members and to check rankings from companies such as A.M. Best and J.D. Power and Associates.
To save more money on your policy, discounts are available through most providers. You can often receive price breaks for buying condo and auto policies from the same provider, installing home security systems, and more.
Another way to save month to month is by raising your deductible, which is the amount you?ll pay out-of-pocket in the event of a claim. Raising your deductible may lower your monthly premium, but make sure you don?t set it at an amount you don?t feel comfortable paying.
Purchasing a condo is a big investment, which is why it?s so important to make sure it?s properly protected. Do your research ahead of time, and you?ll end up with an affordable policy you can trust.