Condo Insurance 101

Unlike homeowners, condo dwellers don't own the building they live in or the land it sits on. But they do need protection for what is inside their specific unit. Buying insurance can often be more difficult and confusing for a condo than a house as you try to figure out what you're financially responsible for.

What does it cover?

Condo insurance covers the inside of your condo while the external areas are typically covered by your homeowners association. It also protects you against liability claims if you are found to be responsible for another person's injury or property damage, or if you have legal fees due to a lawsuit.

Condo insurance typically covers what the condo association's master policy does not. A condo association master policy can be one of two types:

1. "All in" condo master policy - Also known as a single unit master policy, this covers fixtures in your condo, such as appliances, wiring, plumbing and carpets. It does not cover your personal property or any upgrades you have made to your unit.
2. "Studs in "- Covers only the bare structure. You will need to insure all of your condo's interior contents - including bathroom and kitchen fixtures and countertops - in addition to your personal property with your condo policy.

How does it work?

While a master policy covers damage to your condo building, grounds and other external features, your personal condo policy needs to cover your personal possessions, appliances and, sometimes, installed fixtures and other attached features in the unit.

If you need to make a claim (i.e. burglary or fire), you need to file with your insurance company and also contact your condo association so they can file with their insurance company. For instance, if the burglary resulted in a broken door or window, the master policy would typically cover this, depending on the deductible and your association's declarations and agreements.

Why is it important?

In addition to protecting your possessions if they are damaged or stolen, condo insurance also protects you from liability claims and lawsuits if a guest gets injured in your home. It also covers expenses related to living elsewhere - such as a hotel - if you can't live in your condo due to damage covered by your policy. Condo insurance also provides an option to purchase the valuable loss assessment coverage, which protects you in the event you are assessed due to a covered loss. In this instance, each unit member may need to contribute funds to make up the difference. If you have loss assessment coverage, this sum may be partially or totally covered.