Figuring out whether you need insurance while living in a condo is tricky. You need to determine who will cover insurance if your neighbor causes a fire and damages all units and common spaces or if you need insurance for the separate unit you reside in. If you live in a condo or are thinking about moving into one, you need to know about the insurance policy for your unit and the whole building. Blanket insurance is used for condos, securing you and the entire community with your monthly monetary contribution. It’s exclusive of your home insurance, which will only cover your unit and not the whole condo. You need to secure it with your regular insurance in case of property damage and is designed for owners of multiple properties in need of 100 percent reimbursement of value.
What Is a Blanket Insurance Policy?
While insurance is essential as a homeowner, living in a condo may require additional insurance you may need to contribute to with your neighbors. Condo associations need to secure blanket insurance for the entire condo, which covers not only units but common spaces as well, under one limit. This insurance differs from standard policies because, in the former, each property is listed separately with their specified limits which applies to their category. While in standard insurance, the specified limitation applies to multiple properties, which does not mean 100 percent of the value is being insured. Blanket Insurance isn't a separate category of insurance but simply an option condo associations can apply to their existing insurance policies. This insurance acts as a blanket to secure multiple items and properties underneath together.
How Does It Work?
You may need to visit your local insurance agent to inquire if blanket insurance can be applied to your condo, especially if the property covers different areas and has some equipment. Condo associations may ask condo residents to contribute to the insurance for common areas like the pool, requiring them to pay a monthly standard maintenance fee. The risk of fires in condos is high because a big community shares an environment, and fires can quickly spread rapidly, damaging more property. Your insurance will only cover your property unit and not the shared common areas. In determining the insurance limit, you may need to insure 80 to 90 percent of the property's total replacement cost to qualify for this. Insurance companies choose the kind of blanket insurance applicable to the property.
The Benefits and Downsides
The property is insured at 100% of its value compared to standard insurance policies, where the full worth is not received. Yearly appraisals will not need to be carried out because the blanket limit will be much higher than the building's value, so you will receive a full amount if a claim is made. However, Blanket insurance can be approximately 10% more expensive than standard insurance coverage because the latter covers each property individually, but the cost is shared by condo residents collectively. Despite being expensive, Blanket insurance offers better security for a large property like a condo, and with the contribution of all its residents, it can afford to secure it. You should check with your Condo Association about the kind of insurance policy they have in place and what will work best for your condo community. Now that you know what a blanket insurance policy on a condo is and what it entails, you can make an informed decision.