What condo insurance will and won't cover

Regardless of how many other condos someone’s might be attached to, they need to purchase condo insurance and understand what it covers.

It doesn’t matter whether the condo is one of two fused together or one of 100 condos in a building. Buying a condo is a substantial investment, just like buying a single-family home. It’s typically the largest purchase someone makes in their lifetime and it’s important that it is adequately protected.

Condo and homeowners insurance serve the same purpose and are very similar. Both coverthe structure or the home itself, they pay to replace personal property, cover liability costs, and pay for living expenses if a home is damaged or unsafe. The policies are relatively comprehensive, but there are some differences condo owners should be familiar with.

Since condos are connected to each other and share common areas or amenities, condo insurance doesn’t cover the same things as homeowners insurance.

Condo policies protect the unit itself, including the interior walls, flooring, cabinetry, sinks and other permanent fixtures. Condo insurance does not cover the condo building, common areas, elevators, the roof or exterior buildings.

That’s why condo insurance policies are generally less expensive than homeowners insurance policies – they don’t have to cover as much. Although, renters insurance is typically far cheaper than either homeowners or condo insurance.

For example, if a condo owner somehow damages the wood floor in their unit, they could file a condo insurance claim to repair the damages. Flooring inside a condo is covered as part of the interior of the unit, along with any personal belongings. If the flooring inside a communal area of a condo building, such as an entryway, is damaged the condo board or association would be responsible for that repair.

Any damages to the exterior of a condo building, such as the roof after a storm, would be the responsibility of the condo association, rather than any individual unit owners. 

In fact, condo associations are frequently responsible for insuring much more than individual community members. To protect everything beyond what the condo owners are responsible for, associations purchase what are called condo “master policies” on behalf of the unit owners to cover everything else. 

Even a two-condo residence has a single roof and possibly other amenities, so those owners would need a master policy. But master policies become increasingly important as condo buildings increase in size and offer more amenities.

A condo board or association might be responsible and liable for hallways, plumbing, common areas such as gyms or meeting rooms, parking lots, and a swimming pool.  It’s easy to see why insuring those things with a master policy can be expensive, so the cost of that policy is included in the condo fees that unit owners pay the association. 

Changes Made To Your Condo

If a condo owner elects to make changes to their unit, there are some things they need to consider. If the construction might be affecting any common areas of a building, a unit owner should consult the area in question. 

An example might be if a condo owner wants to change the front door to their unit. The door and entryway is likely the responsibility of the condo association and a unit owner would need permission to make changes to it.

Interior walls or construction are more simple. Those changes would be the responsibility of a unit owner and they should consider them in the value of their condo and when they purchase insurance. 

This article first appeared in ValuePenguin.