Condo insurance is sometimes not required but many do not realize what happens if the next unit has a leak. If you own a condo, and choose not to get insurance, you could be setting yourself up for a major problem. If your condo gets flooded from a broken pipe in a neighboring unit, your condo insurance will need to pay that claim generally. Most people with a mortgage will be required to have one.
The Basics of Condo Insurance
As with every home insurance, these are the major components:
A good frame of reference for Dwelling Coverage on a condo is $25 per square foot at this time. In the South Florida Tri-County area, most carriers require a minimum of $50,000. You want to make sure that you are not underinsured. Let your Agent know if you have marble counters, golden sink facets, or anything considered above average on the construction.
Personal property consists of furniture, clothing, technology, and jewelry. Although jewelry is limited and it is sometimes recommended to get an outside policy for jewelry over $1,000 to $1,500. An appraisal will probably be required. You could add the jewelry pieces as an endorsement. But make sure that you understand all the coverage it provides. Also, getting replacement costs on personal property or not. Are you looking to get personal property replaced without depreciation or the lowest price? The lowest priced policy would be replacing your personal property after taking out depreciation, or actual cash value (auto insurance does it). A value shopper will get replacement costs on the personal property, meaning that they will buy you a like brand new item.
Personal Liability covers you in cause a lawsuit is filed against you claiming liability and trying to hold you legally responsible. Typically, in can cover incidents in or out of your home (check with your carrier) which include property damage or bodily injury. Great component especially if you rent out the condo to others. Do not be foolish and not get this coverage.
Loss of use is when you are forced to leave your home to correct a mold problem, for example. Unless your mortgage company let’s you slide on the mortgage, you will have an additional expense. Possibly you may eat out for and it may cover the additional food costs also.
Loss assessment is a necessary coverage as condo. Most commonly used when there has been major weather damage to the condo, someone is injured in a common area, or shared property inside the building has been damaged.
Water Damage Limit
Another point for South Florida especially, although it is moving up throughout the State, is the age of the plumbing. This will limit the coverage that will be allowed in case of a broken pipe. Make sure that you ask your Agent if your policy includes such verbiage. I know a lady who ended up spending her own money to replace her cabinets because she had a $10,000 limit. Most insurance companies have started limiting water. And the only way to get the limit removed on an older condo building is with an inspection proving all the plumbing has been ripped out, removed, and replaced.
What about a condo rented out?
In this case, the personal liability portion of the policy should be of importance. If your tenant slips and falls, that tenant could easily go after you. Whether you are guilt or not, the process will not be fun! Please get good personal liability coverage. It will having you sleeping better at night.
If you are require by your insurance company to provide a 4-point or wind mitigation inspection, check with your condo association as the may have them already. It may save you money.
You may take care of your condo on the inside. Your neighbors water leak may cause you to need to file claim. Use pennies to pay for dollars. Get a condo policy to protect you and you will be glad that you did!