by C. Lyn Walter

Created on: November 29, 2008   Last Updated: May 24, 2010

What Kind of Insurance You'll Need for a Condo

Before discussing the importance of purchasing condo insurance, lets define the word condominium as it relates to home ownership. Condominium is a legal term describing a multi-structure accumulation of homes and the land they are built upon. Individual ownership is limited to the air space and the physical boundaries as set forth in legal descriptions which are executed and recorded by the developer.

The home owner owns the unit but not the land beneath the air space. In addition, the halls, exterior walls, garages, parking spaces, landscape and amenities are comprised of a legally shared, interest ownership with the other condominium owners. Finally, the term condominium refers to a type of ownership, rather than the type of unit it is, such as condo, town home, apartment or co-op unit.

With condominium ownership comes representation through the home owners association (HOA). The HOA purchases master insurance policies to cover replacement costs for damages to the outside physical structures and common areas of the development. Each homeowner owns a share of the interest in the HOA and is responsible for paying monthly dues to cover the financials but, the homeowner, not the HOA, is responsible for everything inside their condominium. This is why it is vitally important to purchase a personal condo insurance policy covering everything of value to you.

Computing the value of the personal belongings found in your condo is the first step in planning for an unanticipated and financially devastating event caused by fire, flood, smoke, theft or other damages. Begin by listing all items that have value including; clothing, jewelry, furniture, art work, household items, dishes, utensils, appliances, and any upgrades you have made to the unit as well.

A homeowner is potentially responsible for damages having to do with personal injury occurring on their property. If a housekeeper trips, falls, fractures a hip, and decides to hold you responsible, you could be liable for damages. For this reason, "Personal Liability" insurance is another important consideration. If you own and rent out your condo, there is also potential risk for damages suffered by tenants. A "Personal Liability Umbrella" contributes additional protection beyond standard policy limits.

Another consideration is the cost of alternative living arrangements should your unit be in need of extensive rehabilitation as a result of substantial damages. "Loss of

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