If you ask any new condo owner what they worry about, it’s insurance. Insurance is what keeps their investments protected. It's the bailout people need when life hands them a bad hand, and when things are about to fail. In many cases, it can even prevent you from having to file for bankruptcy. It's a safety net that is there, simply because we cannot expect to be able to predict and prevent tragedies from happening. That's why there are often major mandates regarding condo insurance. There's a problem, though. It is possible to spend too much money on insurance or buy a condo that would cost too much to adequately insure. So, there's a certain balance you need to be aware of. You need to have just the right amount of insurance. The question remains, how much condo insurance is enough?
How Much Should You Insure Your Condo For?
If you are just starting, you will need to get condo insurance that covers items that are not included in the insurance your condo association currently has. How much insurance you can expect, though, depends on the condo community you're in. If your condo community doesn’t insure anything but the structure of the building (or worse, doesn’t insure anything for you), you will need to get insurance the covers the value of your condo, as well as coverage for all your possessions, and liability insurance. If our condo HOA has insurance for the structure of the building, then you probably just need to get a solid walls-in policy to protect your personal belongings. To find out the type of coverage your HOA has, check out your condo’s bylaws handbook. The information should be in there.
What About Condo Liability Insurance?
Did you ever wonder what happens if someone gets seriously injured in your home? If you don’t have liability insurance, they can sue you and ruin you financially. That’s why this type of insurance is so vital. The rule of thumb for condo insurance is that liability insurance should be included in your basic plan. This is the insurance coverage that helps you out in the unfortunate event of someone being hurt on your property and also assumes liability for the accident. Most HOAs have bare minimum requirements on these policies, with many pet owners being forced to buy extra, just in case Fido acts out. A typical condo will need to get between $100,000 and $500,000 in liability insurance. If you have a large dog or dangerous items in your home, get more than you think you need.
Things To Keep in Mind
Condo insurance isn’t about getting the bare minimum so that you can save on your monthly insurance bills. The minimum insurance coverage policies that you are given are just there to protect the investment that the condo association made in the building—not all the items you worked so hard to attain, nor is it meant to protect the appliances you have in there. If you have a major loss and don’t get enough walls-in insurance, you could be out of a stove, a bed, or even your work items. Of course, figuring out how much all your stuff is worth (and how much you should buy) can be daunting. This is even true for people who have bought tons of insurance before! That’s why most people are better off having a frank discussion with their insurance agent before they move in.