A Brief Guide to Condo Insurance

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A Brief Guide to Condo Insurance

by NCA Financial … on Aug 16, 2018

The ownership structure of a condominium unit is different from that of a single-family house. Here’s what you need to know when purchasing insurance for your condo.

  1. Understand the Master Policy

Since the ownership of all the common areas is shared with other condo owners, the association of owners typically purchases insurance coverage (a master policy) for the common areas, e.g., hallways, exterior walls, etc. The condo association’s policy will outline what is covered and what is not.

  1. Three Types of Coverage

There are three basic types of coverage under a master policy.

    • Primary buildings and common areas
    • Your unit and any items within your unit other than personal belongings
    • Building, unit, and any fixtures

As you can see, the individual coverage you may consider depends upon the scope of coverage of the master policy. Start by determining what is and isn’t covered under the master policy—that can influence the coverage you need.

  1. Know the Master Policy Deductible

Generally, an association’s master policy has a deductible that is typically charged pro-rata among unit owners in the event of any claim. Determine that obligation because, while it may never materialize, it can represent a meaningful financial commitment.

  1. Consider Additional Coverage

Similar to any homeowner, you will need to make decisions about other coverage options, such as cash value or replacement coverage, adding personal liability coverage, and whether flood insurance may be appropriate.

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