Congratulations on making the move to purchase your first condo.
Well I may be assuming that most of the people reading this article are first time condo buyers but hopefully that doesn't offend you.
I usually get the most questions from new buyers because let's face it you don't have the experience with home ownership.
This article will help you understand why you need condo insurance and not renters insurance if you actually own that property.
I will also detail often overlooked coverage on a condo insurance policy so you can make the right choice when shopping for insurance.
Let's start with the key similarities between renters insurance and condo insurance.
Renters insurance includes personal property, personal liability and loss of use.
While there are more features of a renter's policy and they vary from company to company these are the most important.
I will list what each coverage entails as it will also be included in a condo insurance policy.
Personal Property Coverage: This is the most recognized coverage and some would say the main reason why you would get a renters policy.
Personal property includes everything you own such as clothing, dishes, stereos and much more.
While some items like jewelry and collectibles may have limits on the amount of coverage I will touch on that later.
The most common use of personal property coverage is in the event of theft or water damage.
For example you get your bike stolen from the garage and your renters insurance has a $250 deductible to replace that item.
Personal Liability Coverage: Rarely used but by far the most coverage in dollars offered on the renters policy.
When compared to personal property coverage the liability coverage is usually ten to twenty times the amount of insurance.
Why such a large number you may ask? Well if you get your laptop stolen it may be a $2000 claim but if some gets injured at your apartment they may sue you for hundreds of thousands of dollars.
This is why personal liability coverage includes $100,000 to $1 million in protection.
Loss of Use Coverage: The most misunderstood coverage and commonly overlooked can be a savior in the event of a loss.
Take for example your apartment gets flooded by the unit above you when a water pipe breaks.
Now you need to move and find other accommodations until the damage is fixed.
If you incur additional expenses such as higher rent the insurance will pay the difference between your prior rent and the new rent until you are able to move back.
Now the reason you need a condo insurance policy when you own that unit.
The coverage I just explained is also included in a condo policy but what about the actual unit itself.
You might say my homeowner's association will cover that, wrong.
Most HOA's will cover the exterior structure on their insurance policy but from the studs in is your responsibility.
This is where building property coverage separates a renter's policy from a condo policy.
Building property coverage will cover items such as drywall, carpet and cabinets while the homeowner's association will only cover up to the studs.
I promised you a commonly overlooked coverage that most homeowner's don't know about.
That is a floater for your engagement ring which is not covered on your standard condo policy if the ring is worth more than $2500.
Ask your insurance agent about this coverage if you have special jewelry like an engagement ring.
So hopefully you learned why you need a condo insurance policy and not just renters insurance when you own the property.
Well I may be assuming that most of the people reading this article are first time condo buyers but hopefully that doesn't offend you.
I usually get the most questions from new buyers because let's face it you don't have the experience with home ownership.
This article will help you understand why you need condo insurance and not renters insurance if you actually own that property.
I will also detail often overlooked coverage on a condo insurance policy so you can make the right choice when shopping for insurance.
Let's start with the key similarities between renters insurance and condo insurance.
Renters insurance includes personal property, personal liability and loss of use.
While there are more features of a renter's policy and they vary from company to company these are the most important.
I will list what each coverage entails as it will also be included in a condo insurance policy.
Personal Property Coverage: This is the most recognized coverage and some would say the main reason why you would get a renters policy.
Personal property includes everything you own such as clothing, dishes, stereos and much more.
While some items like jewelry and collectibles may have limits on the amount of coverage I will touch on that later.
The most common use of personal property coverage is in the event of theft or water damage.
For example you get your bike stolen from the garage and your renters insurance has a $250 deductible to replace that item.
Personal Liability Coverage: Rarely used but by far the most coverage in dollars offered on the renters policy.
When compared to personal property coverage the liability coverage is usually ten to twenty times the amount of insurance.
Why such a large number you may ask? Well if you get your laptop stolen it may be a $2000 claim but if some gets injured at your apartment they may sue you for hundreds of thousands of dollars.
This is why personal liability coverage includes $100,000 to $1 million in protection.
Loss of Use Coverage: The most misunderstood coverage and commonly overlooked can be a savior in the event of a loss.
Take for example your apartment gets flooded by the unit above you when a water pipe breaks.
Now you need to move and find other accommodations until the damage is fixed.
If you incur additional expenses such as higher rent the insurance will pay the difference between your prior rent and the new rent until you are able to move back.
Now the reason you need a condo insurance policy when you own that unit.
The coverage I just explained is also included in a condo policy but what about the actual unit itself.
You might say my homeowner's association will cover that, wrong.
Most HOA's will cover the exterior structure on their insurance policy but from the studs in is your responsibility.
This is where building property coverage separates a renter's policy from a condo policy.
Building property coverage will cover items such as drywall, carpet and cabinets while the homeowner's association will only cover up to the studs.
I promised you a commonly overlooked coverage that most homeowner's don't know about.
That is a floater for your engagement ring which is not covered on your standard condo policy if the ring is worth more than $2500.
Ask your insurance agent about this coverage if you have special jewelry like an engagement ring.
So hopefully you learned why you need a condo insurance policy and not just renters insurance when you own the property.
SHARE
