If you own a condo, it is essential that you have your own insurance policy, commonly known as an H0-6. Depending on your Condo Association’s master insurance policy, the amount of coverage you may need will vary.
Condo Association's Master Policy
There are two types of master policies that your Condo Association can put into place: “All Inclusive” or “Bare Walls.” The majority of Condo Associations have been using “All Inclusive” approach because they cover the entire condominium complex. This type of policy will cover damage to individual condos and common areas, as well as include liability protection for the association. So, if your condo is part of the building that is destroyed in a fire, the master policy would cover the rebuilding of your condo. A “Bare Walls” master policy will only cover the basics if the entire building is destroyed, leaving the construction of your condo up to you. Thus, the most important question for your condo association is, "do we have Bare walls or All-in?". The answer can be found in your deed, and we can assist you with determining this.
Neither of these policies, however, cover your own personal property or personal liability. This is an important fact that all unit owners need to know, to arrange proper protection.
Even if your Condo Association has an “All Inclusive” master policy, you may want to get some level of dwelling coverage to cover any improvements you may have made to the condo, further increasing its value over the average unit in the complex. The Condo Association will determine the proper amount of insurance to get on the master policy for the entire building, but if it is insufficient, you can also include your own "assessment" protection to fall back without having to sacrifice your equity in the property.
If your condo is damaged or destroyed by a storm or fire, the building would most commonly be covered under the master insurance policy (The associations' policy). But what about your flat screen television, your brand new iPad, laptop, couch, bed, pictures, art work, kitchen appliances, and all of your clothes? Your condo association is not responsible for your stuff, you are. Think about all of the stuff you own in your condo, if it was all taken from you, how much would it cost to buy all of it brand new, $30K? $50K? $100K? Regardless, you’d most likely be unable to immediately replace everything out of your own pocket. A condo insurance policy can cover the expenses to replace all of your stuff right away.
If someone is hurt in your condo, you could be sued. It’s not the most pressing thought on your mind when you first buy a condo, but the threat of being sued is very real. For example, you have friends over for a party and people are leaving at the end of the night. On the way out of your condo, a guest trips over a coffee table, and, God forbid, becomes permanently disabled. Chances are, you are going to be sued. Do you have insurance protecting you? If you do not have a condo policy, you could be in real trouble. The court could potentially come after all of your assets and even your future earnings. A typical condo policy will protect you in such a settlement up to the limit you've chosen, most commonly $500,000 in damages, including a defense team provided by the insurance company.
In conclusion, it is very important for a condo owner to know that even though the condo association has an “all inclusive” master policy, it does not protect your personal property or personal liability. With your own policy in place, you are protected financially and can sleep easy at night.