Condominium insurance is a special insurance designed to fit the specific needs of condo owners. Condo and renters insurance are similar because they both provide personal property and liability protection. However, condo owners need to take into consideration additional coverage for the building based on their condominium association's master policy and coverage.
CONDOMINIUM ASSOCIATION MASTER POLICY
Your condominium association will insure the building and its common elements based on one of two approaches: 1) bare walls, or 2) single entity.
"Bare walls" means that the association will insure only the building including walls, the roof, floors, elevators, etc. The association is not responsible for insuring anything inside your unit such as appliances, cabinets, carpeting, wallpaper, interior partitions, plumbing, wiring, and bathroom fixtures, among others. Therefore, the condo owner is responsible for repairing and maintaining everything in his or her unit.
"Single entity" means that the association will insure the building as well as certain fixtures inside your unit including carpeting, cabinets and appliances. The condo owner is only responsible for his or her personal property inside the unit and for any additions or alterations made to the original structure. These approaches spell out exactly what the condo association is responsible for and what the owner is responsible for. Condo owners should first review their association's master policy to figure out how much of the unit they will be responsible for insuring. Make sure you understand who insures things like garages, sidewalks, swimming pools and other common areas, too. If you're not sure, ask your association or check the declarations and bylaws.
Once you have determined how much of the building you are responsible for insuring, you can figure out the additional amount of coverage you need for your unit. Your policy should cover all items not covered by the association's master policy, and any improvements you've made to the property. For example, if your association's master policy is a single entity policy, it will cover a certain dollar amount for your carpet. If you upgrade your carpet, you are responsible to insure the difference between the master policy's coverage and the value of your new carpet.
Loss assessment is a unique feature of condominium insurance. Under the condo association's bylaws, each owner will be assessed a proportionate share to cover major property and liability losses. For example if the building and commonly shared areas are destroyed by an insured disaster such as a windstorm and the losses are not fully covered by the master policy, your association may assess a certain amount to all unit owners to cover the loss. Your condominium unit owners policy's loss assessment coverage would help pay for your share of these assessments. The standard coverage for loss assessment is $1,000, but higher limits may be available.
DETERMINING HOW MUCH COVERAGE YOU NEED
As you're evaluating how much insurance you need for your unit and possessions, keep the following questions in mind:
- What is the association's responsible for insuring? What am I responsible for insuring?
- How much coverage do I need for loss assessment?
- How much coverage do I need for my possessions?
- Do I have replacement cost or actual cash value coverage for my possessions?
- Are there policy limits for my valuables? Should I purchase more coverage for those items?
- What does the liability coverage include?
- Do I need earthquake or flood coverage for my unit or possessions?
To figure out how much coverage you need for your possessions, simply take an inventory everything you own including your television, stereo, video camera, computer, pots and pans, jewelry, collectibles, clothes, furniture, and add up the total cost. This is how much money you would need to replace everything if they were stolen or damaged. You should also include purchase dates and serial numbers, save receipts and take photographs. Some possessions such as jewelry and computers require additional coverage in the form of floaters. These items are often based on a per-category theft limit that means that your insurer will only pay a specified amount for the item if it is stolen.
nd finally, make sure you understand exactly what your policy covers. Review it at least once a year to make sure you stay adequately covered.
For more information on condominium insurance or how to take an inventory of your possessions, IINC has available the following brochures: "Renters Insurance" and "Taking Inventory." To receive free copies of these brochures, please send a self-addressed, stamped envelope along with your request to Insurance Information Network of California, 900 Wilshire Blvd., Suite 1414, Los Angeles, CA 90017.