If you are getting ready to close on a condo you are buying, you will need to purchase homeowner's insurance before the big day. If you have never lived in a condo before, you might be surprised to find out that the insurance you need for this type of home is often different than the insurance you need for a single-family house. Here are several things you should understand as you prepare to buy an insurance policy for your new condo.
You Should Read Through the HOA Policy
Condos are almost always managed by a Homeowner's Association (HOA), and an HOA will have an insurance policy that covers some parts of the condos that people live in. Before you purchase insurance for your condo, you will need to read over the insurance policy of the HOA, as this will help you determine what type of insurance to buy and how much. The policy the HOA has will be called a master policy.
There are three main types of policies HOAs have, and these are called all-in and all-inclusive, special entity, and bare walls in policies. Knowing which type your HOA has will help you determine what you will need in the policy you buy.
Master Policies Dictate What Residents Need in Insurance
If you discover that your HOA has an all in and all inclusive policy in place, you will need the least amount of insurance for your condo that is offered by insurance companies. An all in policy means that the HOA's policy covers all the common areas in the community, as well as much of the inner parts of the homes. This type of policy covers things in your home, such as the fixtures, surfaces, and walls. It will not cover personal belongings, though.
A special entity policy covers approximately the same things as an all in policy, except that it does not cover any improvements the homeowner makes. If your HOA has a bare walls in policy, this means that you will need insurance to cover the entire inside of your unit, as well as coverage for your personal belongings.
When you purchase a policy for your condo, the coverage should include liability coverage as well as any other types you need, as liability protection is necessary with any type of home insurance policy.
If you are buying a condo and are not exactly sure what type of home insurance to buy, get a copy of the master policy of the HOA and talk to an insurance agent of your choice.