A condo insurance policy covers the personal property and non-common area elements of a condo unit. Condo associations generally have policies that cover only the common area elements, such as the roof, elevator, hallway, and common area grounds. Most association insurance policies use the “”stud to stud”” standard to determine what parts of the building are the associations responsibility, and what is the unit owner’s responsibility. “”Stud to Stud”” means everything within the walls of a unit is the responsibility of the unit owner. Therefore, the condo associations policy does not cover anything within those walls. A condo policy, also called unit owners insurance, covers the personal property of the unit owner, the owners portion of the building, protects the unit owner from liability, and loss of use.
Condo homeowners insurance is for the unit owner. It is highly recommended that all condo owners have this type of insurance because the association will not cover, for example, the damage that results to a unit owner’s property due to a fire. The association would only cover the damage to the common areas of the building, but would offer nothing in the way of replacing any personal property lost in the fire or the costs or repairing the damage that occurred inside the walls of the unit. All condo owners should check what is covered by their associations policy, and then make sure that their own policy covers everything else in their property. Its critical to leave no gap.
A unit owners policy works by charging a premium for protection. The premium is based on the value of the contents within the unit owners walls. A deductible usually applies.
There are several additional types of condo insurance that a unit owner can add onto the coverage of his personal property within his unit. Examples include water back-up insurance (sewage back-ups are common in condos), umbrella insurance, which gives the unit owner additional liability coverage, flood insurance, and additional insurance for expensive items, such as a fur coat. Since a fur coat’s value exceeds the usual per item limit of $1,000 to $2,000, this is wise for anyone with expensive property.
Condo policies offer the benefit of covering what the associations insurance does not, and is a necessity for all unit owners.