Do I Need Extra or Different Insurance When Buying a Condo?
If you're considering purchasing a condominium or a co-op PUD townhouse is best to know all of the details and nuances that come along with owning and purchasing this type of property. In every condominium and cooperative apartment building there is a "master insurance policy". These legal documents cover the Association and require that a certain level of insurance coverage be obtained. If you purchase a home within that complex, your home loan lender will insist on receiving proof that there is a master policy and what that coverage consists of.
This master policy does not cover everything so you are responsible for a type of homeowners insurance. The master policy covers items that are common such as the roof, walls, elevators, walkways and any general heating sources for common areas. This will also cover any lawsuits against the complex such as a guest or a tenant falling down the stairs and injuring themselves.
Read More: How Much of the Condo Do I Own?
As a resident of the complex you will need your own homeowners insurance. Any improvements you make to the property will be covered under your own insurance. If you add wallpaper or remodel your kitchen, these upgrades will not be covered by the master policy.
Related: What is an HOA?
If you're unsure about what type of insurance you need it's best to check with a real estate attorney or your real estate agent to make sure that you have the right insurance policy. If you speak to your current homeowners insurance company, granted you have one, they should be able to explain the difference and what you'll need if you purchase a condo. This is typically called and HO-6 policy. Any insurance agency should be able to provide one but you might also consider going to the same company that the master policy is issued. This company would be able to tell you exactly what you are responsible for versus what they are responsible for by having both policies in hand. If you have questions you can certainly speak with the associations property manager, their attorney or your own attorney as well as the insurance agent for your building or potentially your unit.
If you're renting a condo within an association you are not required to have your own policy but it's not a bad idea to have a rental insurance policy for your personal belongings. This would be considered an HO-4 policy, covering your personal items inside the property. If you are renting you'll also want to make sure that the owner of the condominium unit has their own homeowners insurance policy specifically designed for renters.
Cover your bases on all sides means that if the worst should happen, you are completely covered on all sides.