At the risk of stating the obvious, a condo is very different from a house. However, both types of property must be insured. While it may seem counterintuitive that condo insurance is more complicated than the owner's policies, since the former is smaller, it is actually quite true. Between dealing with the building association, the main building policy and other residents, it is not as simple as a simple owner policy. Check out these tips to keep in mind when purchasing your condo insurance.
1. Find out first what the main strategy covers
When you pay the contributions of your condo association, you invest with all the other owners to collectively insure the common parts of the building. This is called a main strategy. Before purchasing a personal policy for your own home, review the terms of the main policy and find out exactly what you are already paying so that you do not needlessly pay for double coverage. There are two main types of main strategies: bare walls or all inclusive. Bare wall policies cover everything related to the actual structure of the building, but nothing inside the unit itself. All-inclusive policies may cover certain fixtures inside the unit, such as lighting or flooring. Owners of a bare master policy will need a higher individual insurance rate than those who have an all-inclusive master policy.
2. Content and structure policies
When choosing your condo insurance policy, you should make sure that your policy covers both content and structure, not one or the other. In the event of a fire, you not only want to be able to replace your carpets (content), but also replace your kitchen cupboards (structure). Make sure you have a condo insurance policy that covers both.
3. Know the difference between the cash value and the replacement cost coverage
The cover of the cash surrender value includes the depreciation in its payment amounts. For example, if you were to replace a mattress five years after purchasing it, the cash value policy would take into account five years of depreciation to determine the amount of money owed to you. Replacement cost coverage does not include depreciation. You would get the money you need to replace your mattress with a new model today, which would result in a higher payment.
4. Natural disaster cover
Does your condo insurance cover flooding? What if you have a backup of the toilet? Although a primary policy may cover flood damage to the actual building, it will not help you replace your damaged property with a flood. Water backup coverage is another area where residents should purchase individual policies in the event of a sewer overflow in the building.
5. Determine if liability coverage is required
What would happen if someone sued you for damaged property caused by your guests or your children? Does your insurance policy cover liability? When thinking about this type of coverage, it is usually best to go wrong on the safe side and get at least minimal liability coverage in case you or a family member is the cause of an accident or if your dog bites someone.
It is never a bad idea to buy additional coverage beyond the minimum amount covered by the condo's main policy. You will need to consider your specific needs and lifestyle when deciding which policy to choose, but the peace of mind will be worth it in the long run.
