Condo insurance protects your home in a similar way to regular home insurance, but you may not need as much coverage as for a typical home. That’s because your building structure is probably covered by your association’s master insurance policy.
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To decide how much homeowners coverage to get for your condo, start by looking at the condo association’s primary insurance policy, which covers the exterior of the building, elevators or stairwells, and other common spaces. There are two types of coverage: “bare wall inside” and “all inside,” and they affect how much homeowners coverage you need to buy.
Does your condo master policy help cover your home?
There are two types of master policies. You must first determine what type your condo is and whether the condominium association’s master policy covers some of the things inside your apartment. if so, that reduces the amount of homeowners coverage you need to buy.
all in: this type of master policy insures the interior and exterior surfaces of your unit, so you only have to worry about insuring the items you own (clothes, furniture, etc. .) .) that are inside the condominium. Any fixtures that are attached to the walls, such as kitchen cabinets, toilets, or showers, would be subject to the condominium association’s master policy. however, improvements can be a gray area.
Bare Walls In: With this type of master policy, anything within the four walls of your apartment would need condo insurance. You’ll need to purchase an individual policy to even cover appliances or fixtures, like the refrigerator or the sinks in your bathroom.
If your master policy is complete, you don’t need as much homeowners coverage. If it’s bare walls, you’ll need to make sure the home coverage you buy is enough to replace all the improvements attached to the surfaces.
calculate how much home coverage you need
Once you’ve figured out the rate, you need to estimate how much it would cost to replace your home in the event of a serious accident. One approach is to get an estimate from an architect, contractor, or interior designer on the value of the home. Even if they can’t provide a full estimate, they can provide you with a benchmark per square foot for comparable units that would be helpful. otherwise, there are two estimates you can use from your insurer or mortgage lender.
Your mortgage lender may require a specific amount of homeowners coverage because they are lending you money and have a vested interest in protecting the property. in one case, the lender specified 20%, but this requirement can vary even among major mortgage loan providers. it’s a good idea to clarify whether the requirement assumes an all-in master policy or bare walls.
When we talked to allstate and geico agents to get a condo quote, neither of them asked what the master policy covered. instead, they calculated coverage based on the lender’s requirements or the size of the unit.
If your lender doesn’t have a required amount of coverage and you don’t have a good appraisal from a property expert, we recommend looking at how the estimate works with your monthly budget, your risk appetite, and how much you’ve saved to shore up the rest.
For any repair work you do, the insurance will pay the bill up to the limit of your coverage. if the cost of the job exceeds this limit, you must pay the difference out of pocket or make concessions in terms of materials and scope.
keep your homeowners coverage amount up to date
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We recommend that you review and update the coverage limits of your policy at least once a year. Three factors can cause your insurance needs to change: the cost of labor and materials, changes in real estate values, and the added value of any renovations you make.
Labor and material costs can change over time, so when you renew your policy or compare quotes from major insurers, update the per square foot estimate for your condo dwelling coverage. Homeowners who used the percentage home value method will need to check to see if recent changes in home values have outpaced their existing home coverage.
Finally, we recommend that you contact your insurer or insurance agent whenever you decide to update areas such as the bathroom or kitchen. this will allow them to adjust your policy limits to match the increase in value of your unit.
what does housing coverage do?
The housing portion of your condo policy pays to replace your possessions and furniture after certain disasters. most fires, plumbing or hvac problems, and explosions are covered. earthquakes, floods, and subsidence are generally not covered by condo insurance.
Most policies define belongings and furniture to include everything within the walls of your unit, such as clothing, valuables, and electronics, as well as the kitchen island, sinks, and appliances. appliances installed.
If your main condo association policy is all-inclusive, then that policy will pay for accessories like cabinets, bathtubs, and kitchen equipment. Your personal condo policy would pay for the clothes in your closet and any moveable furniture you brought in, like your bed and sofa.