how condo insurance differs from home insurance

A condominium is different from a house or an apartment - you own part of a building or a property, but not all of it. Insurance for condominium owners is different, too.

Just like homeowners and renters, people who own a condo unit want to be insured against financial loss brought about by such dangers as theft, fire, and lawsuits. But, a condominium will typically be covered by two separate insurance policies that protect different parts of the whole.

The first of these two policies will be held by your condominium association, or other administrative group. It's sometimes known as the master policy. This policy covers the structures and areas owned in common by all the unit owners. This usually includes the roof and exterior walls, stairways, recreation rooms, elevators, swimming pool and grounds.

The other policy is your individual coverage, and it needs to protect your personal property and that portion of the building that belongs to you.

But, which parts belong to you? Depending on the state where you live and the particular condominium you buy into, you might own - and have responsibility for insuring, if coverage is available - everything between the bare walls, floor and ceiling of your unit. This could include carpeting, floor tile, bathroom fixtures, cabinets, appliances, countertops and interior walls.

In some cases, the master policy might cover your unit's original fixtures, making you responsible only for any alterations or modifications that you make. In still other cases, you might also be responsible for what's inside your walls: plumbing and wiring.

If your unit comes with a patio, balcony, garage or garden area, those will also likely be your responsibility. If it includes a "limited common" area, such as a balcony or room that you share with only one or a few other units, you will probably want to insure your share of it as well, if possible.

The details of what property you own should all be spelled out in the association agreement you get at the time you purchase the condominium. You'll want to bring that agreement along when you discuss condo insurance coverage with your independent agent.

One feature of condominium insurance, as with homeowners insurance, is coverage for the structure - the inside of your unit. A condo policy will generally cover interior structures, such as cabinets, flooring and countertops within your unit's surrounding walls, but only as specified in your policy. For example, damage to the interior of your unit due to fire or vandalism may be covered. Damage caused by neglect may not be.

A standard policy usually provides even more protection than that. Typical condo insurance coverage, within the limits of your particular policy, may help to cover:

• Loss assessments when a covered peril damages the community's common property and your association bills you for a share of the repair costs.
• Personal property, such as TVs, furniture, computers and artwork, that's stolen or damaged in a covered peril, such as a burglary.
• Damage to another's property for which you're held responsible.
• Medical payments, if a guest is injured on your property.
• Temporary housing costs if you're unable to live in your unit due to a covered loss.

Additional condo insurance coverage may also be available. It might be wise, depending upon your circumstances, to consider:

• Coverage for individual items from your personal property. "Scheduling" an item on your policy designates coverage just for it, usually at the appraised value, in cases when your policy does not provide enough coverage. For example, you may have a ring worth $8,000 but your policy only covers $3,000 worth of jewelry. By scheduling the ring, you can insure its full appraised value.
• Higher coverage for loss assessments.
• Flood, water backup, or earthquake coverage if your unit is in a floodplain, susceptible to drain backup, or in a potential earthquake zone.

Since there's much less property and structure to cover with condo insurance than with homeowners, it generally costs less to insure a condo. To find out how much less, you will have to do your homework. Study your association agreement to determine exactly what parts of the structure you own and are responsible for insuring. Tally the value of your personal property, giving special attention to costly or irreplaceable items. Then visit an independent insurance agent, with your association documents in hand, and explore the range of possible coverage options. Then kick back and enjoy your home. You've earned it.

A variety of factors will impact how much you pay for condominium insurance. One is how much personal property you have, and how much it's all worth. Another is your deductible. If you choose a lower deductible, your premium may be higher – and vice versa. To save on condo insurance, you may want to consider a higher deductible, as well as insuring your car, motorcycle and other assets with the same carrier. Discuss available insurance discounts with your local independent agent today.