THURSDAY, FEBRUARY 23, 2017
Welcome to Part 2 of our series on condo living and condo insurance. Be sure to read Part 1, which discusses the most common condo agreements and how those agreements affect your condo insurance. This article addresses the main differences between a condo insurance policy and a home insurance policy.
Let's start with the basic structure of a condo insurance policy and a home insurance policy:
As mentioned in Part 1, the basic structure of both policies is very similar. The majority of policies look like this.......
Coverage A- Dwelling
Coverage B- Other Structures (detached)
Coverage C- Personal Property
Coverage D- Additional Living Costs
Coverage E- Personal Liability
Coverage F- Medical Payments
Both the condo insurance policy and home insurance policy have this basic makeup.
Here's where the condo insurance policy and home insurance policy differ according to the above policy structure:
Coverage A- Depending on the condo agreement, you might own and be responsible for insuring a portion of the condo. You might also be responsible for insuring the entire building- many condos are now being built like single family dwellings, so the dwelling is entirely yours and you are responsible for insuring the building. Or the condo association may be responsible for insuring the entire building and you are only responsible for insuring your personal contents.
So the agreement will give you guidance as to the amount of Coverage A that will be necessary. Perhaps the agreement says you are responsible for insuring the walls inward (a common arrangement). So you would start to add together things like drywall, attached cabinetry, fixtures such as a bathtub and sink. Basically anything that's attached to the walls. After adding it up, you might decide $25,000 is the amount you need.
If the agreement says you are responsible for insuring the entire dwelling, then it's pretty straightforward. Your insurance agent will determine the replacement cost of the dwelling and you'll insure for that amount. So in this example, Coverage A could be $150,000.
And lastly, if the agreement states the condo association is responsible for insuring the dwelling, then you would not need any additional Coverage A beyond what the policy automatically provides (we've seen $1,000 as a common number, but verify with your insurance company).
Coverage B- A home insurance policy includes an automatic amount of coverage for detached structures (think garage, utility shed, etc.) It's based on a percentage of Coverage A (10% is pretty typical). So in the same $150,000 example above, you'd get $15,000 for Coverage B.
A condo insurance policy does NOT normally include any Coverage B. What does this mean for you? It means that if you have a detached garage or utility shed as part of your property and want to insure it, you will need to add coverage for that building.
Coverage C- No major differences here, but there is one exclusion that should be addressed. If you rent your condo out (many vacation condos fall into this category), there is an exclusion for Coverage C- "Property in an apartment regularly rented or held for rental to others by an "insured." So if you want coverage for the contents that are part of your condo (think appliances, furniture, electronics, etc.), then ask your agent if you can buy back coverage for this situation.
Coverage D, E and F- No major differences here as well. Visit our homeowners insurance page for more detailed descriptions of each coverage.
One last big difference between a condo insurance policy and home insurance policy:
A typical provision in your condo agreement is the idea you will share in claims that directly affect collectively owned property. Examples of collectively owned property could include a clubhouse, pool, game room, gazebo or anything the unit owners share in conjunction with the association. As you can see, these are usually items that are for the enjoyment of the residents of the condo complex.
Your condo agreement will specify the dollar amount that you are required to pay in the event of a claim, for collectively owned property. This is called loss assessment. A typical condo policy will provide loss assessment of $1,000. What if you need more? You can request a higher limit, subject to additional premium.
Another provision in your condo agreement is that loss assessment can also be applied toward liability claims. So for example, a guest of a resident is swimming in the condo pool. Due to a lack of signage concerning pool depth, the guest dives off the edge of the pool and hits her head on the bottom of the pool. Loss assessment would come into play here as well, as this would be considered a valid liability claim. And just like already mentioned, if you need more loss assessment, you can purchase it. It's inexpensive.
So moral of the story? Read your condo agreement and KNOW the amount you will be charged for loss assessment. You can either choose to pay that out of your pocket OR increase the coverage on the policy.
Due to the increasing popularity of condo living, it's becoming more important to understand the differences between a home insurance policy and condo insurance policy. You want to make sure you have the proper coverage to properly protect you in the event of an individual claim or condo association claim. And we're here to help you navigate and explain the differences.
If you have any questions about your Ohio condo insurance, please give us a call at (937) 592-4871 or visit our devoted condo page. You can also request an Ohio condo quote quickly and easily.
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