Condo insurance is a special type of residential insurance policy that is designed specifically for condo owners. Condos are a unique type of property because the owner typically retains full rights and responsibilities for the interior of the unit, but the exterior of the unit may be maintained by the condominium association. If you own a condo or are preparing to purchase a property, you may be required to purchase and maintain this type of coverage by your lender. The lender will have minimum coverage requirements, but you may also benefit from opting for additional coverage.
A lender’s requirements for coverage typically will be for the replacement or repair of the property if it becomes damaged, and some lenders may have a liability requirement as well. Liability coverage will pay for medical bills, court costs and other related expenses if someone else is injured on the property and when you may be held liable for the expenses. These types of expenses can quickly mount, and liability coverage can help you to avoid paying for these expenses out of your own pocket.
Repair and replacement coverage typically will apply for specific types of damage on your property, and these can vary by policy. For example, some policies may provide coverage if your unit has been damaged by a flood, and others may not. Many will include coverage for common perils, such as theft, fire and windstorms.
Any time you file a claim on your condo insurance, you will be responsible for paying the deductible, and your insurance company may pay for the rest of the expenses up to the coverage limit for approved claims. The deductible amount can vary within a specified range, and this is typically one to two percent of the coverage. However, this can vary, and you can discuss the options with your insurance company. Because you will be responsible for the deductible each time you file a claim, it makes sense to have the funds available to use as needed in a savings account or another liquid asset account. Keep these points in mind as you purchase the condo coverage that is best for your needs.