This is your very unique insurance that fills in where HOA insurance leaves off.
Be it a house, apartment or a condo, each requires a very unique type of insurance.
A lot of people get mostly confused about Condo coverage. They assume that all they need is a 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 rebuild, leaving the unit owner with a big list of: any structure improvements he/she may have done before the loss, interior walls, floors, built-in appliances and cabinets, tubs, toilets and lighting fixtures to take care of.
So, before you begin, you need to read your Master Policy to know exactly what is covered by Association and what is left for you. Then, estimate the amount of coverage required to cover your part, like floors, wallpaper, lighting and plumbing fixtures, cabinets and so on.
Condo insurance has the following types of coverage:
Personal Property (Coverage C)
Personal Property (Coverage C) 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 property instead of the depreciated; * always select “Special” form which means any cause-of-loss is covered, except a few specifically excluded, like Earthquake; * as with any Homeowner or Renters policy, Condo insurance has a specific dollar amount for some items, like coins, jewelry, art, fur and so on. You may want to schedule any item that is very expensive or rare to make sure 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 normal 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 normal household expenses are $4000 per month, including mortgage payments, utilities and other bills. After moving to a hotel some of your expenses will stay as they are, such as mortgage payments. Some will be increased, such as eating out every meal and some will be added, like pet kennel expense. 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 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 “good will gesture” coverage for people at your place or outside, park, for example, with minor injuries. The limit goes somewhere from $1000 to $25000 per person depending on the company. It can be used regardless 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 amount to replace: floors, any wallpaper, carpeting, cabinets, etc.
Inflation Guard endorsement is a great addition. You won’t need to calculate the labor and building material costs every year to update your coverage; instead have insurance company do it for you. Inflation Guard lets insurance company to increase your Dwelling limit every year by a certain percentage to maintain adequate coverage.
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 think of keeping your Deductibles at $1000 or higher, so that the cost of insurance stays low. Again, make sure you are comfortable with it in case claim arises.
A few great points
- Add Building Ordinance or Law Coverage in order to have enough to rebuild to comply with zoning and building codes at the time of a loss.
- Loss Assessment coverage is a great addition to Condo policy. The coverage is for claims involving building or its common areas. 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 are excluded on all California policies and must be purchased separately.