6 Tips for buying condo insurance
A common mistake made by condo owners is assuming that they don’t need their own separate home insurance policy. It’s commonly believed that you’re covered for insurance by the condo association, when that’s almost never the case. The policy from the condo association typically only protects the common areas (the elevators, gym, lobby, etc.), but doesn’t protect any renovations or improvements you’ve made to your unit, personal liability if a guest gets hurt in your unit, or your personal belongings.
Do you need condo insurance? Here are some tips when buying condo insurance.
Figure out how much coverage you need
It’s important to recognize that the needs of condo owners is different from homeowners. While the condo association’s policy covers the building, you’ll still need to insure your personal belongs. You’ll want to protect your most valuable possessions, including computer, furniture, jewelry and TVs.
To figure out exactly how much coverage you’ll need, make an itemized list of all your belongings (it helps to do it room by room). Put an approximate value for each item (depreciated value, not how much you originally purchased it for) and tally them up.
Determine the type of condo insurance policy to buy
Your next big decision is the type of condo insurance policy to buy. There are two basic policies: specified perils, and all perils.
Specified perils is the most basic, no frills policy. As its name suggests, it only protects your belongings against risks mentioned in your condo insurance policy. Risks commonly protected against include fire, lightning, smoke and vandalism.
All perils is a more comprehensive insurance policy. It offers the highest level of protection for your belongings. You’re protected against everything, except those perils specifically mentioned in your condo insurance policy. All perils insurance policies typically have higher insurance premiums than specified perils.
There’s no one-size-fits-all answer for the type of insurance policy to buy. It all comes down to your personal financial situation. If you have an emergency fund with six months’ living expenses, you may be able to get by with a less coverage. Likewise, if you’re a first-time homebuyer and you don’t own many possessions, going with specified perils instead of all perils may make the most sense.
Here are some other tips when buying condo insurance:
- Take the time to take photos or videotape all your belongs.
- Keep receipts for any items you buy and in a secure location away from your condo unit (you don’t want your receipts to go up in flame if there’s a fire at your building).
- Be sure to record serial numbers for electronics, bicycles and any other product you own of value.
- Take the time to update your list of belongings once a year or whenever you make a major purchase.
Following these tips will help you keep your condo safe, and avoid suffering financial catastrophe, should something unfortunate happening involving your unit.