When you take out a mortgage for a property, no matter if it’s a new single-family home, a townhome, or even a condo, the bank won’t officially hand you the keys until you’ve provided documentation stating that you have purchased an insurance policy for your property. Why is this? This is because the bank needs proof that they will be covered in case something would happen to your property, after all when it’s under a mortgage they are really the owners of the property, not you.
To help you in looking for condo insurance, here are 3 things you need to know.
The Difference Between a Condo and a Single-family Home
When reading over your insurance policy’s terms, you should know that this is a difference between condo coverage and single-family home coverage. With an condo, there are different questions you need to know the answers to. The way an insurance companies defines things like primary dwelling, personal property, and other structures, may impact the coverage you select for your property. Make sure you reach the coverage of each policy you are considering carefully so you select the best one for your needs.
Homeowner Association and Personal Property Insurances
For a condo unit, your insurance policy should cover interior walls, appliances, attached structures (like a garage), and your personal property. Yes, that’s right, your personal property should be covered by your insurance policy, not your homeowner’s association. The exterior of your building, grounds, common areas, etc. are usually covered by the condominium association’s insurance policy, commonly called a “master policy”.
Make sure you know what is covered under the master policy and what isn’t as it can vary from association to association. To find out, you should obtain a copy of the bylaws from your association, these should contain all the details you’ve ever wanted to know, and then some!
You should also ask about flood, water, and natural disaster coverage so you know what you are responsible for in this instances, and what you might need to obtain additional insurance to cover. A portion of your association dues go to pay for the master policy, so you have a right to know what you are paying for.
It always pays to shop around when you are looking for condo insurance, or property insurance of any type. Different companies will have different premiums and coverages, so the more quotes you get the more you’ll know so you can make an informed decision.
Just be careful to not look at only the bottom line of what an insurance policy costs, sometimes it pays to spend more for peace of mind than being cheap when it comes to insurance.
The right condo insurance policy will save you time and money in the long term, so doing your research up-front before obtaining a policy is smart. Plus it will save you from worrying so you can enjoy your new condo stress free!
Do you have any other tips for purchasing condo insurance?