For those who have just bought a condo or are planning to rent one, condo insurance might be a challenging decision. Most of the costs in a condo will be for maintenance and protection of the common areas that the building has.
However, what about the unit that you have rented or own? You will require a personal condo insurance policy. Here is everything that you need to know about this topic and which one is the best pick for you.
What is Condo Insurance?
The owner or the tenant will have to purchase insurance to protect their personal belongings or improvements that one might need to make. The insurance will protect you from losing out on a considerable amount of money whenever there is damage to the unit.
In this age, condo insurance is a must, especially when there can be several damages to the unit. But, which is the right insurance for your condominium? Here are two insurance policies that are preferred by condo owners and tenants:
1. Commercial condo insurance
This insurance will cover the structure as well as the common areas of the building.
2. Personal condo insurance
This insurance policy will control the contents, personal liability, and upgrades of the condo.
For those who are renting a condo, commercial condo insurance will be the ideal option. However, they will also need tenant insurance to protect their valuables and themselves.
If you own a condominium, you’ll need an individual condo insurance policy even though your condo association has its own coverage. While the condo association takes some of the insurance burden off you, you’ll still need your own protection. – Donna Fuscaldo, Insurance.com
What Does a Condo Insurance Cover?
There are several things that condo insurance will cover and provide you protection and here are some of those:
1. All-Risk
This includes all the contents of the condo unit as well as the improvements that are necessary for the unit. Some of the insurances do not cover intentional damage. So, make sure to check the policy properly.
2. Loss assessment coverage
In a condo community, a lot of areas are shared by other tenants. Loss assessment coverage includes the damages that are made to the common areas. This is especially beneficial for those community members who are short on the condo association’s insurance.
3. Additional living expenses
In cases when the condo unit becomes inhabitable and owners need to relocate, there are other living expenses that could help to cover the living expenses which can be staying in a hotel.
4. Personal liability
There can be cases when someone gets injured while making repairs in the condo unit. To help cover the legal expenses and other charges that one might incur, personal liability insurance would be the ideal one.
5. Contents insurance
It will cover your belongings for losses, which can be a result of the common types of risks.
6. Replacement costs
This can cover the contents of your unit that will be replaced in the future.
7. Overland water damage coverage
This coverage can help the condo owners and tenants to be safe whenever water enters their homes due to a natural calamity.
8. Sewer back-up coverage
This coverage can help in covering the cost of repairs whenever water enters, or the drainage system is overloaded with water. You can learn more about the coverage of condo insurance by watching this video.
Tips When Choosing a Condo Insurance
Here are a few things that the condo owners or tenants must consider while purchasing condo insurance:
1. Valuable and special items
You should get complete coverage of every non-standard and valuable item is them there in the unit. One can add endorsements if the limit isn’t sufficient. This can be helpful if there are musical instruments, jewelry, and other expensive equipment.
2. Locker
Your condo insurance must also cover your personal locker and make sure that the insurer includes the same in the policy.
One should also know about the shared insurance policy of the condo association and what all it covers. Condo owners only own the particular unit and have shared ownership of the rest of the building. Therefore, when it comes to insurances, you will have shared the responsibility to ensure the common areas of the building.
Usually, in most of the communities, the cost of building insurance is included in the condo fees. However, make sure that you are clear about the policies and other declarations of the condo association before purchasing a unit.
What is the Difference Between RCV and ACV?
RCV, Replacement cost valuation, and ACV, Actual cash value is a couple of really important terms when it comes to condo insurance. RCV is popular for homeowners as well as condo owners as it allows the owners more protection during a crisis.
During any damage, you will have to pay the cost of replacement in a couple of installments, and your insurer will be responsible for paying half or all of it. This will allow you to make the required repairs and new replacements. (1)
An insurance policy with ACV is comparatively less costly, which is mainly due to the depreciation that is taken into consideration. Every valuable asset will see depreciation on a yearly basis, which will be covered under your insurance coverage. ACV is an alternative to RCV that is inexpensive.
Important Factors To Consider In Condo Insurance Costs
There are several factors that go into consideration while purchasing condo insurance, and the cost is definitely one of the firsts. Here are a few factors that affect its cost:
- Location: The location of the condominium matters majorly. If the condo is located in a major city such as Toronto and especially if it is in one of the hotspots of the town, the cost of insurance will be higher.
- Age: The age of the condo building also plays a major role. If the condo building is recently constructed, the cost will be less as the chances of damage are comparatively less. On the other hand, if the building is old, there are higher chances of building suffering damages. Therefore, the cost will also be higher.
- Leasehold improvements: The amount that you spend on upgrading your unit also plays a crucial role.
- Personal belongings: The value of your personal belongings, such as jewelry and other expensive pieces of equipment.
- Past claims: The past claims that might be under the name of the previous owner or tenant are also taken into account.
How To Get Your Condo Insured?
There are several insurance companies online, which can help you get your condo insured at affordable rates. Make sure you select one of the most trusted companies as condo insurance is a significant purchase. Moreover, it should protect you at the right time instead of being another burden on you during rough times.[2]
Also, go through the policies and declarations properly before purchasing the insurance to be completely aware of what is included and what is not. Get a consultant to help you out before finalizing the deal to make sure that everything is done properly.
Getting condo insurance is crucial to protect yourself against any damage or repair costs that the owners or tenants might have to incur. Therefore, make sure you make a wise decision and go through the policies properly.
Opting for insurance that covers everything will be a great advantage if you are planning to stay for a few years. Get your condo insurance at the right time and live a worry-free life in your new home.
To know more about new condo properties, visit our website here.
Reference:
1 https://www.thebalance.com/replacement-cost-insurance-vs-actual-cash-value-4154015
2 https://www.trustedchoice.com/condo-insurance/coverage-faq/
