In this article, you will learn all the basics on condo insurance, costs, tips to customize your coverage and compare quotes in order to save, and 6 important questions to ask your potential insurer before you sign the contract.
Now that you have a condo or plan to buy one. The questions you may ask are the following:
- should I get condo insurance?
- And do I even need it?
The answer is yes for both questions. If you own a condominium, you need an individual condo insurance policy even if your condo association has its own coverage.
Condo association insurance generally covers building exteriors and common areas of the building; it doesn’t cover what’s inside your specific unit. It may not either cover all damages outside your unit.
Condo insurance policy helps cover the entire condo unit and belongings, and also includes liability coverage. It also covers any upgrades you make to your unit: new granite countertops for instance.
What condo insurance does and doesn’t cover?
Below is a list of some of the common problems that are and aren’t covered by a typical condo insurance policy.
|Will pay for||Will not pay for|
Fire and smoke
Wind and hail
Wear and tear
Underground water Damage
Intentional injuries to others
Damage from birds, rodents and insects
Condo Insurance Costs
How much does condo insurance cost?
Condo insurance costs between $100 to $400 per year on average. The rates are typically lower than rates for homeowners insurance for single family dwellings. Rates also vary from one state to another. For instance, Average annual condo insurance premium in Las Vegas is $373 while it is $438 in New Jersey.
Other factors that can increase your condo insurance rates, include:
- The location you live in.
- Your deductible amount.
- Construction materials used in your condo.
- How much your HOA’s insurance covers.
- Coverage options and limits you choose.
The question now is How much insurance do you need for your condo?
According to Donna Fuscaldo, a Sernior Contributor on forbes.com, one good estimation is to assume $40,000 in personal property fot the first 1,000 square feet of your condo and then add 5,000 for each additional 500 square feet. Figure out what level of liability insurance you need. If your assets are more than $500,000 you may want to look into an umbella policy.
Condo Insurance Companies
There are plenty of condominium insurers on the market, choosing the right company and policy can be challenging.
While there is no such thing as the best condo insurance company for every condominium owner, I have listed the top 5 in the country, based on customers reviews, with each having its unique advantages.
5 Best Condo Insurance Companies:
- Nationwide: Best Overall for Condo Insurance.
- Liberty Mutual: Cheapest Condo Insurance.
- Amica: Best for Liability Coverage.
- USAA: Best for Veterans.
- Farmers: Best for Claims.
6 questions to Ask Your Potential Condo Insurance Provider before you sign the contract
As you’re shopping for your condo insurance you will start receiving quotes, from real insurers to agents or affiliate who are working for commissions. Ask each one of them these questions to make sure your condominium will be properly insured.
- What master policy you provide?
There are two broad categories of master polices: Bare walls-in and All-in.
Bare walls-in – That policy provides coverage only for the exterior features.
All-in – this coverage protects the basic building and common areas plus the structural elements and fixtures in the condo.
As you can see the All-in is a better option for you.
- How expensive is the association deductible?
There is a recent growing trend in some states toward more expensive condo deductibles. Before you sign the contract ask how much deductible you will pay.
Matthew Cullina, director of product management for MetLife Auto & Home in New York, states:
“In the past it might have been only $5,000, but we’ve seen $25,000 and up to $50,000,” he says. “That’s the biggest one I’ve seen. You could really be hit with a bill that you weren’t expecting or didn’t know about if you didn’t do your homework up front.”
- How much coverage needed?
You are buying the Condo insurance in order to cover your property and belongings in case of losses or damages. The question is how to determine how much insurance to purchase?
“One good estimation is to assume $40,000 in personal property for the first 1,000 square feet of your condo and then add $5,000 for each additional 500 square feet. Figure out what level of liability insurance you need. If your assets are more than $500,000, you may want to look into an umbrella policy”, says Donna Fuscaldo
- Cash value or replacement cost coverage?
Actual cash value insurance only pays for the depreciated value, that is replacement cost minus any depreciation (ACV = replacement cost – depreciation); whereas replacement cost insurance pays for the full replacement cost of your items in case of theft or damage.
Replacement cost of damaged or stolen properties is usually the most favorable when losses or damages occur; it pays for the actual cost of replacing property.
- Have you insured contents and structure?
When it comes to condo insurance, content and structure are different. Make sure your policy covers contents and structural items. A cheap quote may not cover your contents.
Here are some examples to help you better understand the difference between contents and structural items;
- Contents include: furniture, area rugs, electronics, jewelry, valuable artwork/collectibles
- Structure includes: flooring, cabinetry, countertops, carpeting, lighting.
- Are you covered for flood and wind damage?
Although usually offered by the U.S. government to all homeowners, flood insurance may be required by the mortgage holder if the property is in a flood zone.
Homeowners insurance may cover certain types of storm damages – including wind, hail and lightning; but it does not cover damage caused by flood and earthquakes. It’s important to read your policy and ask questions regarding coverage for flood and storm damages.
If you have a suggestion, comment or question regarding condo insurance, kindly comment below.