Insuring a condo is different than insuring a single family home in California. In order to get a loan, the lender will require that you show proof of insurance for the structure of the property, this is usually provided by the homeowners association. The other type of insurance you purchase will cover the contents and your personal property, which would not be covered by the association’s policy.
To protect your investment and your financial well being you should have the following coverages for your condo:
1. A personal policy that coverage for your personal possessions, improvements and additional living expenses if you are the victim of fire, theft or other disaster listed in your policy.
2. Liability or umbrella protection that covers you in case someone other than a family member is injured on your property.
3. The “master policy” provided by the homeowners association which will cover the structure of the building, common areas like the roof, attic, elevator, boiler and walkways for both liability and physical damage.
You should ask the association exactly which structural parts of your home are covered by the master policy. This information is usually located in the association’s bylaws. Ask your condo association if you have any questions, because you should know what is covered and what is not covered under their insurance. Many condo associations have a “bare walls” policy, which means they will cover drywall, but nothing attached like paint, cabinets, and flooring.
Alterations, remodeling, and improvements are usually not covered by the association’s policy, so make sure you know exactly what they will not cover in the event of an emergency. You should get your own insurance policy to cover such improvements and other items like built-in appliances, plumbing, wiring, bathroom fixtures, bathtubs, countertops, and so on.
Also ask your insurance professional about the following additional coverages:
- Unit assessment – If an assessment is charged to all unit owners because of a loss, this insurance would reimburse you for those fees. An example would be if a common roof was destroyed in a storm, all the owners would charged the cost of repairing the loss and would get that charge as an assessment.
- Water back-up – This would cover you in the event of damage caused by the back-up of sewers or drains. Water back-up is sometimes excluded from insurance policies.
- Umbrella liability – This provides higher amounts of liability coverage than a standard insurance policy does.
- Flood or earthquake – Regular insurance does not cover these types of events, so you would have to purchase seperate flood and earthquake policies. Your insurance agent can help you get a policy from the California Earthquake Authority.
- Floater or scheduled property – Expensive personal items like jewelry, furs, art and collectibles usually have small limits of coverage on a regular insurance policy. To insure your valuables correctly, talk to your insurance agent about getting full coverage for those items.
Sometimes discounts are available if you have your auto, condo and other insurance policies through the same company. Ask your broker if they know of any special deals that may apply to your situation. You can lower your payments by raising your deductibles. Additional discounts are provided by some carriers if you have a security system or fire alarm that rings the fire department directly. Your broker will let you know what discounts are available to you. If you insure your unit with the same company that underwrites your building’s insurance policy, you might also get an additional reduction in premiums.