Condos: Easy Living, Tough Insurance

Do you own a condominium? To you, condo ownership may represent a feasible way to home ownership. Or maybe it represents a second residence in some exotic location you like tovisit. Or maybe it’s an investment to generate rental income. Regardless of why you own, understand that insuring a condo is much different than insuring a traditional home.

Statutes and Paperwork

A thorough review of your master deed (often called declarations or “docs”) is necessary to adequately insure your condo. These docs can be multiple pages of legalese that make it difficult to decipher insurance requirements. Further, your association’s bylaws may contain important insurance information. In addition, some states have statutes which dictate condo insurance requirements. For these reasons, a best practice is to review your insurance needs with one of our agents.

Your docs should contain a definition of “unit.” This term is often used to define the boundaries of the property that you individually own vs. common property that is owned by the association or other entity. For example, boundaries may include the space you occupy as well as all real property located between the unfinished walls, floor and ceiling. Note that there is no standard definition of unit: All docs are different.

“Bare Walls In?” or “What I Bring In?”

Some docs will make the association’s insurance policy (often called “master” policy) responsible for all building items and fixtures including those located inside your unit. Such items may include floor coverings, kitchen and bathroom fixtures, built-in cabinets and counters, appliances and equipment. In this case, you are only responsible for insuring your personal property such as furniture, electronics, and clothing. You may also be responsible for insuring alterations you make to the existing floor plan, such as laying carpet over tile.

Other docs will make the master policy responsible only for real property that is located outside of the unit. In this case, you are responsible for insuring the items mentioned above including building items and fixtures located inside your unit. Some docs will specifically list the items that you must insure yourself, but others are not as clear. This is another important reason to review the docs with your us.

If you plan to use your condo to make some extra income, proceed with caution: Once you rent or make your condo available for rental, your insurance changes. For example, once your condo is made available for rent you lose coverage for your personal property. This means items like furniture, electronics and decorations are no longer insured. Since condos often are rented furnished, this is a large gap that must be addressed before the damage happens. Coverage is also eliminated for appurtenant structures—such as a detached garage or