Condo ownership has become an increasingly popular way for buyers to own their own homes and invest in real estate. It’s the new starter home for young families, and many empty nesters are downsizing to free up retirement savings. An estimated one in eight households now lives in a condominium either as renters or owners.
If you’re planning on moving into a condo, you should know how to make an insurance claim after a condo fire.
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Condo Association Insurance and Your Home
In a multi-unit building with common rooms like gyms and pools, hallways, stairwells, and elevators, it’s not as simple as insuring just your unit. The condo association or strata has its own insurance policy for the building itself.
Premiums can get pretty expensive and have risen considerably in some regions.Typically, this is fairly minimal coverage. The condo association will cover the main structure, but other elements are left to the individual owners. These are some of the things you will have to insure yourself.
Your Unit and Improvements
The amount of coverage you need for your unit depends on the association’s policy and whether they have a bare walls-in or all-in policy.
- Bare walls-in only covers the structure of condo dwellings, i.e., the walls and what’s behind them, such as drywall, insulation, wiring, plumbing, etc.
- All-in coverage also includes fixtures, countertops, flooring, and built-in appliances.
If the association only has a bare walls-in policy, you will have to get the rest covered yourself. Even if the association does have an all-in policy, if you make improvements or renovations to your unit, you will need extra coverage to replace those improvements.
Your condo insurance policy will also cover personal contents. This includes belongings like furniture, clothing, electronics, etc. When you’re looking for coverage for these belongings, pay attention to the terms Replacement Cost and Actual Cash Value.
- Replacement Cost policies will pay out the amount of money it would take to replace your belongings at today’s retail prices.
- Actual Cash Value will pay out the value of your belongings before the loss, taking into account depreciation. This often leaves you with less than enough money to replace everything new.
Additional Living Expenses
Repairing a condo building after a fire is a long, complicated process, and you’re going to have to live elsewhere until the building has been restored. This is why you need coverage for Additional Living Expenses. This part of your insurance will help pay for the costs of renting another home and associated expenses beyond your normal spending.
A loss to fire is only one peril covered by condo insurance. In addition to other sources of damage such as natural disasters, your insurance should also cover personal liability. Should someone ever get hurt in your condo, they could initiate a lawsuit against you. Personal liability insurance will help cover those damages.
Ask the condo association for details about the coverage they provide. Next, make sure your own condo fire insurance is enough to cover your belongings.