What to Know Before Getting Condo Insurance

Things to Look for in Condo Documents Before Getting Insurance

Buying a condo is exciting, but you’ll need to secure the right insurance before it’s a done deal. Insurance protects your investment and gives you peace of mind when something unexpected occurs. The ideal personal condo insurance policy depends on the contents of your condo documents. These papers tell you what the condo association’s insurance covers and what gaps you’ll need to fill with your own personal coverage.

Connell & Curley Insurance Agency Inc. has served Natick, MA, and surrounding areas for over 60 years. We’re here to make insurance easy, even when sifting through condo documents feels overwhelming. Here’s what you need to know before securing a policy.

Understand the Master Policy

The condo association’s master insurance policy, included in your HOA fees, provides broad coverage of your condo’s building, the grounds, and shared features. This is your starting point for figuring out what you’re responsible for.

Coverage

Be aware that not all master policies are the same. They generally come in two types:

• All-in policies cover everything from the building’s exterior structure to the interior finishes of individual units. This might include the floors, built-in cabinets, and light fixtures. But don’t let the name fool you — this policy won’t cover your personal belongings or upgrades you make to your unit. For instance, if you install new countertops or appliances, you’ll want personal condo insurance coverage to account for that.
•  Walls-in policies stop at the interior walls of your unit. The drywall, floors, fixtures, and finishes are your responsibility. Walls-in provides the bare minimum coverage, so you’ll need a better condo insurance policy to pick up the slack.

Deductibles

Master policies also specify the deductibles involved. This is the amount the condo association must pay before master insurance coverage kicks in. As the condo owner, you have no say over the master policy’s deductibles, limits, or coverage. All you can do is select a personal policy to cover the deductible, often $10,000 to $20,000.

In fact, the master policy’s deductible is the bare minimum coverage you should aim for. Then, if you have a walls-in policy and want coverage for your fixtures and finishes, include the value of those items in your personal coverage as well.

Note: Regardless of your condo’s master policy, make sure your personal coverage extends to your belongings

Review the Covenants and Bylaws

Condo living creates a sense of belonging. Of course, being part of a tight-knit community also entails adhering to the condominium association’s rules as outlined in their bylaws and covenants. This information typically encompasses insurance requirements for individual unit owners, including:

• Minimum coverage: Your association may require a defined level of liability insurance or particular types of coverage, like protection against water damage. Make sure your condo insurance policy complies with these requirements.
• Limitations on claims: Bylaws often outline the party liable for damages in certain situations. For instance, if a plumbing problem originates in your unit and damages a neighboring property, the bylaws might assign responsibility to you.

Learn About Loss Assessments

Loss assessments may be imposed if the condo association’s master insurance doesn’t cover a claim, the damages exceed the policy limits, or the reserve fund is depleted. For example, repairing a hail-damaged roof may cost $300,000, but the master policy only covers $250,000 after a $10,000 deductible. The association can issue a loss assessment to divide the deductible and the remaining $50,000 over the policy limit among the unit owners.

To protect yourself, consider adding loss assessment coverage to your personal condo insurance policy. This addition is typically affordable and ensures you’re not blindsided by sudden costs.

Assess the Condo Association’s Financial Health

Review your condo association’s financial standing to determine how it might impact your insurance needs. Here’s what to look for:

•  Adequate reserve funds: A healthy reserve indicates a well-run association that proactively addresses maintenance needs.
•  Special assessment history: A high rate of special assessments over the years could mean the association doesn’t manage its finances well, increasing the risk of additional costs.
• Past insurance claims: Frequent claims might indicate underlying problems with the building, such as plumbing issues or structural damage.
• High HOA fees: While not directly related to insurance, high fees signal financial instability or poor management.

Determine Maintenance Responsibilities

Shared spaces often mean shared responsibilities, but not everything is communal. The condo documents should clearly outline what the association is responsible for and what the unit owners need to maintain.

The association often maintains the roof, exterior walls, landscaping, and common areas like lobbies or pools. Then, individual owners maintain the interior fixtures, plumbing, electrical systems, and appliances.

Knowing where these lines are drawn helps you determine what your personal condo insurance policy should cover. For instance, if you’re responsible for your unit’s plumbing, adding water damage protection is a good idea.

Shop for Condo Insurance in Natick, MA

Now that you know what to look for, you may be ready to compare insurance options. Connell & Curley Insurance Agency Inc. can help you secure the right coverage to protect your home and belongings. Contact us today for a personalized condo insurance quote.