Condo living is very unique and can make life a little more simple in the long run with great amenities and help with maintenance and upkeep. However, condo insurance is a little more complex than insurance for homeowners or apartment landlords. Condo insurance is broken into two main areas: individual unit insurance and master insurance for the entire complex.
Let’s examine the differences between these two types and why you will need to have both should you decide to invest in a condo.
An Overview of Condo Insurance
Condo insurance is coverage that will help protect against losses and repair costs for a condo unit. This insurance usually offers protection in the case of theft, vandalism, fire damage, water damage, and more. It’s important to invest in condo insurance as it will help cover your finances in case of these possible damages.
Master Condo Insurance
Master insurance, also called Condo Association Insurance, is an insurance that is paid to the homeowners association, protecting the complex as a whole. This type of insurance will cover two main areas of risk: general liability for the association and property damage coverage for common areas. For instance, if there is damage to the outside of a condo building such as the roof, siding, common areas, and/or amenities, master insurance will help cover the costs needed to repair. This insurance will also act as liability insurance for injuries that happen to a person while on the community property.
Individual Unit Insurance
Aside from insurance that covers issues with the exterior of your building and the community at large, you will need to investigate and purchase individual unit insurance. Unlike the insurance that goes to the homeowners association (HOA) to repair or improve exterior areas, this type protects the items within your unit.
For example, should a calamity occur in your unit, like a theft, fire, water damage, or other event, your possessions will be covered. This would include your furnishings, clothing, electronics, technology, and, in some cases, your appliances.
According to experts at NerdWallet, “If your HOA has what’s known as an ‘all-in’ HOA policy, it typically will cover all the original items built into your place, like cabinetry, lighting, and other fixtures, plus things such as plumbing and wiring. However, if the HOA has what’s called a ‘bare walls’ HOA policy, it’s up to you to ensure everything in your living space beside the walls, floor, and ceiling.”
There are other advantages to having individual unit insurance in addition to HOA insurance. Individual insurance for your unit will cover liability should someone get injured within your condo. Another way it can help is if your unit has been damaged due to an accident, your insurance may cover your living expenses should you be unable to continue to live in the condo during repairs. Lastly, if repairs to a common area are exorbitant, your individual unit insurance may need to kick in where deficits exist.
Do you need help understanding the differences and significance of master insurance vs. individual insurance? Drop us a line in the comments or contact us for more information.
Individual Unit Insurance
As a condo owner, it’s also your responsibility to purchase individual unit insurance that protects your condo unit. This type of insurance will protect your own personal belongings that are damaged or stolen within your unit. It also can protect you if there is an accident in your condo. Most of the time, mortgage lenders and condo associations will require you to have your own insurance policy on top of master condo insurance.
For example, should a calamity occur in your unit, like a theft, fire, water damage, or other event, your possessions will be covered. This would include your furnishings, clothing, jewelry, electronics, technology, and, in some cases, your appliances.
Advantages to Owning Both Master & Condo Insurance
Having individual unit insurance in addition to HOA insurance can offer many benefits. Individual insurance for your unit will cover liability should someone get injured within your condo. If your unit has been damaged due to an accident, your insurance may cover your living expenses should you be unable to continue to live in the condo during repairs. Also, if repairs to a common area are exorbitant, your individual unit insurance may need to kick in where deficits exist.
At Thayer & Associates, we can help you understand the difference between master condo and individual insurance while helping you manage your commercial property finances.