Back to the Basics: Adequate Insurance for Your Condo

Owning a condominium has many benefits over owning a house, such as not having to shovel snow in the winter or cut grass in the summer. Further, some condos have amenities like a fitness center or swimming pool. On top of all this, buying a condo often provides similar investment benefits to buying a house that apartment renters not enjoy. And, as with home ownership, it is a good idea to obtain your own insurance to cover your unit and personal belongings in your condo as well as ensure the association itself is properly protected.

Condo Associations

When you purchase a condo, you will join something known as the Condo Association. You will be required to pay association fees that help pay for things like the upkeep of the common areas. Additionally, your association fees will go towards paying for insurance that covers some general risks to the building itself. The details of who is responsible for what can be found in something called the association bylaws and there can be two different types. Understanding what the master policy should cover and what is the responsibility of the unit owner is helpful in determining the level of coverage you will want to purchase.

Who is Responsible

The most common policy responsibility for a unit owner is called “walls in” coverage. This requires the owner to coverage damage to everything from the studs in including fixtures, floors, and cabinets, as well as all of your personal belongings. If a pipe breaks in the wall under this scenario the association’s insurance should coverage the repairs. Most bylaws are very explicit about where the association’s coverage stops – most generally either at the studs or the finished drywall surface.

Another less common form of responsibility is known as “all-in” coverage. This type of arrangement has the condo association cover everything but a unit owners personal belongings. For an individual unit owner, all-in coverage will mean needing less insurance. This type of insurance struture is extremely rare in Illinois and still requires the individual owner to secure their own liability coverage.

It is important to note that if a claim is made that the master policy does not completely cover, it is possible that unit owner’s individual coverage may be used to make up the difference. You should also be aware that some HOAs require unit owners to obtain a specified level of coverage or stipulate which insurance carrier must be used.

Having insurance can also provide you with personal liability coverage in case someone is hurt while inside of your unit. It can also protect you in case you are sued because you, your child, or your pet caused damage to property or injured someone. If the injury occurs in a common area, the association will be responsible for any claims made by the injured person.

Get Adequate Protection

If you are considering purchasing a condo (or already have), one consideration you will have is obtaining an appropriate level of insurance. While having insurance is not necessary in all situations, it is often advisable in order to avoid the risk of having to pay large sums of money out-of-pocket. Unit owners should work to with associations to ensure there are no gaps between where an association’s insurance ends and a unit owners begins. Contact a condo insurance broker today.