When you own a condominium, you do not own the land it situated on, but you still need insurance for your individual unit and personal belongings as well as coverage for problems not covered by your homeowner’s association (HOA) master policy such as theft or accidental injuries occurring in your unit. The HOA master policy covers physical damage to any structures or shared spaces owned by the HOA.
What Condo Insurance Covers
A recent Forbes article (9.23.2022) titled, What Is Condo Insurance and Do You Need It? discloses the following. (https://www.forbes.com/advisor/homeowners-insurance/condo-insurance/)
While a good HOA master policy is important, each condo owner needs their own insurance in order to be properly protected. Condo insurance covers:
- Personal property: Covers items like your furniture, TV, clothes, appliances, dishes, pots and pans, rugs, musical instruments and jewelry from problems such as fire and theft.
- Interior walls: Helps pay for repairs to the inside walls of your condo and other inside items like cabinets and built-in bookshelves if they’re damaged by a problem covered by the policy (like a fire).
- Liability: Covers accidental injuries and damage to others, such as your dog biting someone or your child kicking a soccer ball through a neighbor’s window.
- Medical payments to others: Covers medical expenses for minor injuries in your condo, like a guest who slips and falls on a wet kitchen floor.
- Additional living expenses (ALE): Also known as “loss of use,” this helps pay for extra living expenses such as lodging, meals, laundry and pet boarding if you cannot live in your condo because of a problem covered by the policy (such as a fire).
What Types of Problems Are Covered by Condo Insurance?
With a standard condo policy, you’re covered if the damage is from a “named peril,” which is another way of saying “problem.” An HO-6 policy covers damage caused by these perils:
- Fire or lightning
- Windstorm or hail
- Riot or civil commotion
- Aircraft, including self-propelled missiles and spacecraft
- Vehicles (including impact from a vehicle, but not the vehicle itself)
- Vandalism or malicious mischief
- Falling objects
- Weight of ice, snow or sleet
- Accidental discharge or overflow of water or steam
- Volcanic eruption
Better dwelling condo coverage: If you want expanded coverage for your dwelling, you might want to purchase an HO-17 32 endorsement. This expands coverage beyond the 16 named perils on a HO-6 policy to “all risks” (covers everything except for problems specifically excluded in the policy). For example, damage caused by wind-driven rain is not covered by an HO-6 policy. If wind-driven rain comes in through a window, you wouldn’t be covered for the damage. An HO-17 32 endorsement would typically cover this type of loss.
Better coverage for possessions: If you want expanded coverage for your personal property, you can get an HO-17 31 endorsement. Similar to the HO-17 32 endorsement, this expands coverage beyond the “named perils” to “all risks,” so everything is covered except what’s specifically excluded.
What Types of Problems Are Not Covered by Condo Insurance?
Here are some common exclusions in a standard HO-6 condo insurance policy:
- Ordinance of law, meaning situations where the government requires you to demolish, remodel, renovate or repair your property
- Earth movement, including landslides, mudslides, mudflow, sinkhole, earthquakes, land shock waves, tremors due to a volcanic eruption, and any other earth movement such as rising, shifting or sinking
- Water damage, including floods, surface water, waves, tidal water, overflow of a body of water or spray from a body of water, sewage and drain backup, leaks from swimming pools and other structures
- Power failure
- Nuclear hazard
- Intentional loss
- Governmental action
What Does HOA Condo Insurance Cover?
Homeowners association (HOA) insurance is often referred to as the “master policy.” A typical HOA master policy covers everything outside a condo unit, such as the building (including the exterior walls and roof) and shared spaces such as hallways, stairwells, elevators and swimming pools. A master policy is usually one of two types:
“All-in” condo master policy. This covers the exterior and some interior of the building, including items like appliances, carpets, plumbing and wiring. An all-in policy does not cover personal belongings, like your furniture, clothes and other possessions.
“Bare walls” condo master policy. This policy does not cover anything within a unit’s walls or your personal belongings. Some bare walls policies might cover plumbing and electrical systems.
The HOA master policy also covers injuries to guests in common areas. For example, if a guest tumbles down a common stairwell, the master policy could cover the medical expenses.
If you have a mortgage, the lender will most likely require condo insurance. Your HOA might also require it.
How Much Condo Insurance Do I Need?
You want enough condo insurance to cover what you could lose in a worst-case scenario, such as a fire. Depending on what the HOA master policy covers, here are some things to consider to determine how much condo insurance you’ll need:
- The cost to rebuild or repair damage to your unit. If your HOA has a bare walls policy, you’re responsible for repairing and replacing items like cabinets, toilets, built-in bookshelves, flooring and light fixtures.
- The value of your personal belongings. A good way to calculate this is by doing a home inventory of your possessions. A solid home inventory includes item descriptions, purchase dates, estimated values and serial numbers and receipts (if available). You can do a home inventory with a written list, pictures, videos or a mobile app.
- Having a home inventory can be crucial for making an insurance claim for everything you’re entitled to, especially with a large claim. If you can’t remember everything you had, you won’t know to include it.
Replacement cost vs. actual cash value
A standard condo insurance policy typically replaces your personal items based on actual cash value (ACV), meaning it will only pay the depreciated value of your item. If you want your belongings replaced with new, similar items, you can typically buy replacement cost coverage. Replacement cost coverage is more expensive than ACV, but it’s generally better coverage.
Loss assessment coverage
This optional coverage is also called “special assessment insurance.” It helps cover costs in situations where the condo association’s master policy won’t. For example, say a fire damages the elevator and hallway in your building, causing $350,000 worth of damage. If the condo association’s master policy has $300,000 in coverage for the building’s structure, that leaves a $50,000 shortfall. The condo association could divide this remaining cost among the building’s condo owners. Loss assessment coverage can pay for this additional cost. Without it, you could face large and unexpected costs.
Bottom Line: Even though you may not have a lot of possessions, you need liability protection. And, if you have a mortgage on your condo, your lender will likely require you to buy insurance for it as might your HOA.
St. Petersburg Communities
If you’re interested in any of these of communities or live in one of them and are thinking of selling, call Estelia today!
Greater Pinellas Point
Historic Old Northeast
Historic Roser Park
Isla del Sol