Condo Insurance

Everything You Need to Know About Condo Insurance (Almost)

Real estate is a popular financial investment. When speaking on the subject of condo insurance there are two common scenarios. First, an individual may be purchasing the condo in order to live there themselves. Second, the purchase can be for the purposes of renting it out to someone else and collecting the rent as a source of income. Regardless of the situation, condo insurance is an absolute must.

You will Need Condo Insurance to Close Escrow

When purchasing a condo, the owner is either acquiring a mortgage or paying for it outright. Few people purchase their properties outright but those who do will find that there might a homeowners association that requires condo insurance. If there is a mortgagee, then they will almost certainly require condo insurance as part of the process of closing escrow. In either case, if you are purchasing a condominium then condo insurance is a must.

What Does Condo Insurance Typically Cover?

A standard HO6 policy (synonymous with condo insurance) will provide coverage in the event of a covered peril for interior walls (dwelling) and also personal property. There are other add ons to condo insurance that you can opt to purchase or opt out of. Personal liability coverage is a very common add on for condo insurance and necessary if you have an umbrella policy in the amount of $300,000. Another option for condo insurance is to select to be covered in the event of an earthquake. Fire, earthquake and theft are examples of what insurance companies call “perils.” It is important to be aware of what you are covered for and what you aren’t. Earthquake, for example, is optional and not automatically included.

What Else Do I Need to Know About Condo Insurance?

Aside from the scenarios in which another entity is requiring for you to purchase condo insurance, there are benefits to having a condo insurance policy in place. For one, if you obtain the condo insurance from the same company that provides your auto insurance then you will likely be discounted. Condo insurance is relatively inexpensive compared to auto insurance in most cases. Having the same company provide both policies will reduce your auto insurance rates. Additionally, if you own any items of particular value then you can add them to your condo insurance and cover anything that happens to that item, even if it is your own fault.

To be clear on what condo insurance does and doesn’t cover, what companies can provide the lowest rates, and how you can discount your auto insurance rates it’s best to talk to a licensed insurance agent. They can walk you through the specifics of what mortgage companies are looking for. A licensed agent will also be able to narrow in on what is most important to you and help you cover all of your bases with your condo insurance policy.

Yuliya Polovinchik is a Broker-Agent at Fairfax Insurance Services.

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