Why Condo Insurance Is Different From Home Insurance
Buying a new home is an exciting milestone in ones life. Amidst all of the excitement, however, comes the responsibility of figuring out what type of insurance you’ll need for your new home. What many people don’t realize is that the type of home you’ve purchased, such as a condo versus a house, will have an impact on what kind of insurance policy you will need.
While the two may seem quite similar, there are a few key reasons as to why condo insurance is different from home insurance.
Ownership is the primary difference between condo’s and houses. With a house, you own the entire structure, as well as the land it sits on. With a condo, you own only the interior of your unit. This plays a large part in the differences in insurance policies.
With home insurance, your policy will cover both the exterior and the interior of the home, your personal belongings, the property your house sits on, and any outlying buildings (i.e.: sheds or garages).
With condo insurance, your policy will generally cover the interior walls of your unit and most things inside, such as cabinetry, furniture, appliances, and personal belongings. In addition to your policy, there will be a building insurance policy, known as the master policy that covers the exterior of your unit and shared common areas. This master policy will usually be built into the price of the Homeowners Association (HOA) fees.
Loss Assessment Coverage
Loss Assessment Coverage is something that home-owners do not need, but that condo owners should seriously consider. Because of the shared ownership of common spaces in a condo building, it is important to include Loss Assessment Coverage in your policy. Shared spaces in a condo building typically include the lobby, gym, pool area, and elevators.
Your buildings insurance policy covers most incidents that occur outside of the unit you own, however, if these incidents cost over and above what the master policy covers, the owners of the units can be responsible for paying the difference. Loss Assessment Coverage protects you from paying out of pocket in such situations.
Premiums can vary greatly between condo insurance policies and homeowner insurance policies. Of course, this aspect depends on the size and value of the property you own. In general, because condo owners are typically insuring less than a homeowner (smaller units, no exterior coverage and no land coverage), condo insurance is usually significantly cheaper than home insurance.
While there are a number other smaller variations between the two, these are the main reasons why condo insurance is different from home insurance. It is important to understand how and why these policies are different, and when each type of policy is required. Insurance is one of the most important aspects of home-ownership as it protects your home and your belongings as well as protecting you from liabilities.
Anyone looking to, or in the process of purchasing a home should take the time to learn about the various types of insurance policies available to them.