This is your very unique insurance that fills in where HOA insurance leaves off.
Be it a house, apartment, or condo, each requires a unique type of insurance.
A lot of people get mostly confused about Condo coverage. They assume that all they need is protection for their belongings, like Renters insurance, because Condo Association has a Master Policy which covers the building. Master Policy does, indeed, include coverage for the building. Unfortunately, most of the time, only the raw structure will be rebuilt, leaving the unit owner with an extensive list of any inside improvements they may have to take care of after the loss, like interior walls, floors, built-in appliances, and cabinets, tubs, toilets, and lighting fixtures.
So, before you begin, you need to read your Master Policy to know exactly what is covered by the Homeowners Association and what is left for you. Then, estimate the limit of coverage required to protect your parts, like floors, wallpaper, lighting and plumbing fixtures, cabinets, etc.
Condo insurance has the following types of coverage:
Personal Property (Coverage C)
Personal Property (Coverage C) in Condo insurance is for your belongings. A few points here:
- always go for Contents Replacement Cost endorsement to make sure you get a full value on your lost or damaged items instead of the depreciated;
- always select the “Special” form, which means any cause-of-loss is covered, except a few specifically excluded, like Earthquake;
- as with any Homeowners or Renters policy, Condo insurance has a specific dollar amount for some items, like coins, jewelry, art, fur, etc. You may want to schedule any very expensive or rare item to ensure it is protected up to its value.
Loss of Use (Coverage D)
Loss of Use (Coverage D), also known as Additional Living Expense coverage, will pay the difference between your usual monthly expense and the increased expense caused by you temporarily moving out of your place, which is being repaired due to a covered loss. For example, your household expenses are $4000 per month, including mortgage payments, utilities, and other bills. After moving to a hotel, some of your expenses, such as mortgage payments, will stay as they are. Some will be increased, such as eating out every meal, and some will be added, like pet kennel expenses. Your total monthly expense now comes to $5800 a month. Loss of Use coverage will reimburse you for the additional $1800 incurred.
Personal Liability (Coverage E)
Personal Liability (Coverage E) – if your actions or negligence causes injuries to others, or their property gets damaged because of you, and you are being sued – this is the coverage to take care of that. It is an accident and may happen anywhere to anybody. Keep limits high enough to make sure you are well protected in case of a lawsuit.
Medical Payments (Coverage F)
Medical Payments (Coverage F) is a “goodwill gesture” coverage for people at your place or outside, like in the park, for example, with minor injuries. Depending on the company, the limit ranges from $1000 to $25000 per person. It can be used regardless of who is at fault and is meant to prevent possible claims.
Increased Condo Building Items (Coverage L)
Increased Condo Building Items (Coverage L) – for your Condo “indoor dwelling” part. The limit is your estimated replacement amount: floors, wallpaper, carpeting, cabinets, etc.
The Inflation Guard endorsement is a great addition. To update your coverage, you won’t need to calculate the labor and building material costs yearly. Instead, have an insurance company increase it slightly for you. Inflation Guard lets your insurer raise your Dwelling limit every year by a certain percentage to maintain adequate coverage.
A Deductible is a part of any insurance and is your out-of-pocket amount that needs to be paid before insurance coverage kicks in. Since claims on Homeowner, Condo, or Renters policies do not happen that often, you may want to keep your Deductibles at $1000 or higher so that the insurance cost stays low. Make sure you are comfortable paying the selected Deductible limit at the time of a claim.
A few great points
- Add Building Ordinance or Law Coverage to your Condo policy in order to have enough to rebuild to comply with zoning and building codes at the time of a loss.
- Loss Assessment coverage is an excellent addition to the Condo policy too. The coverage is for claims involving the common areas of your Condominium. Master Policy should take care of any accidents that happen outside your unit. But…some claims may exceed their policy limits, and Condo Association will bill you and other unit owners for the difference.
- Earthquake and flood-related damages are always excluded from all California policies and must be purchased separately.