Understanding Condominium Insurance Coverage

There are four components in a basic condominium insurance policy:

1. Building Additions/Alterations Coverage
In most condominium arrangements, the unit holder is responsible for insuring everything within the inside structure of the unit. Depending upon your association agreement, you may be responsible for some or all of the items below:

• Everything within the confines of the unit
• Any decorative items (cabinetry, fixtures, wallpaper, carpeting, paint, etc.)
• Any permanent changes you make to the base unit

Brooks can help you review your condominium association agreement to determine exactly what your responsibilities are in regards to insurance coverage.

2. Personal Property/Contents Coverage
Unlike a homeowners policy, which covers your personal property at a certain percentage of your total home replacement value, a condominium policy requires you to specify an exact amount to be covered. Thus, it is extremely important that you consider all of the contents of your condominium - personal belongings as well as anything else that isn’t built in to the unit - to make sure your limits are high enough to provide total replacement costs in the event of a loss. Computers and other expensive electronic equipment - or jewelry, fine art or other valuables - may need to be listed separately to ensure proper coverage.

3. Liability Coverage
Just as with a homeowners policy, this provides coverage for bodily injuries in the event someone outside your household is injured on your property, or if you become liable for someone else’s injuries (not related to an auto accident) in a situation away from your home. Typically, you can buy liability limits that range from $100,000 to $500,000 as part of a basic condominium policy. For increased liability protection - which will provide higher limits and broader protection, including auto-related liability claims - you should seriously consider Umbrella Liability Coverage.

4. Loss Assessment Coverage
If your condominium association incurs property damage or a liability claim that is limited or not covered by the association’s insurance - and all unit holders are assessed to help pay for it - this coverage will help you pay for your share of the assessment.

How to manage condominium insurance costs
Condominium owners are sometimes surprised to see that the costs of insuring their unit can be almost as high as insuring a free-standing home. This is because there are other unit holders in close proximity and, statistically, their exposure to risk is greater. For example, there is a higher incidence of theft in multi-unit dwellings as well as an increased risk of fire or water damage because of its ability to spread to attached units.

Issues that affect condominium insurance costs include:

• Type of construction
• Location
• Age of building
• Number of units
• Level of coverages
• Amount of deductible - the amount of claim costs you agree to pay out-of-pocket (The higher your deductible, the lower your cost for insurance)

Items that can help reduce costs include:

• Gated community
• Central alarm system
• Smoke alarms
• Sprinklers
• Higher deductibles