Condo insurance is that bet you make with your insurance company that the “oops” will happen. Even if the “oops” doesn’t happen, you need to be prepared. Condo insurance is a little different then insuring a single family home, so let’s see what you need to look at. Don’t understand insurance, contact one of the many fine insurance agents int he Houston area to review what you may need in condo insurance.
What condo insurance does the condominium association carry?
The good thing about condo insurance is that it is normally less expensive due to the cost being spread across multiple owners. Most condo insurance policies carried by the condo association itself cover studs out and common areas, plus liability for the common areas. That essentially means that anything inside your unit is NOT covered. So, if you get a water leak and it damages your carpet or flooring, your condo insurance is responsible for the loss. If you don’t have a copy of the master insurance policy, ask for one from your condo association and review exactly what they are covering. In rare cases, there is an All-In policy that covers the entire property inside and out (remember, even All-In policies do not cover your personal belongings. Also look at the deductible on the master policy and encourage your condo association to keep that deductible in reserves for the condo insurance; again, planning is always your best bet.
What you need to cover
If the condo insurance policy handled by the condo association is a ‘studs out’ policy, then you will need to have a policy that cover:
- Damages within your unit (studs in)
- Your personal belongings in case of loss
- Liability to cover a guest who may be injured inside your unit-(If you are doing short term rentals with your unit as is common in Houston, this one is important).
It may sound like a lot of condo insurance considering you are paying on the master policy through your HOA dues, but consider the consequences of being under-insured. A typical water leak that damages flooring and cabinetry can easily run in excess of $5000 per incident and those incidents never seem to come at a good time financially. Don’t forget flood insurance if you happen to be in a flood plain; this can be purchased through your state and normally will be mandatory at closing.
The best recommendation is to have a professional insurance agent review the master policy for the condo so they can confirm what coverage may be lacking and recommend additional coverage if needed. By doing this, you will be certain that one of those little “oops” won’t wreak havoc on your finances. If you’re looking for an agent or would like more information about what is actually covered with a condo insurance policy you might consider Allstate.
Don’t forget to check out what your lender requires
If you are just now purchasing your condo be sure to find out what if any requirements your lender may have regarding condo insurance. Again, a copy of the master policy and a reputable insurance agent should be able to help you out on the rest so there are no budgetary surprises.
So get on the phone and make the call, first to your condo association for a copy of the master policy and then to your favorite Houston condo insurance agent.