by Jinianne Lutz

Created on: September 11, 2009   Last Updated: September 16, 2009

People often think that renter's and condominium owner's insurance are the same thing, yet there are several differences between them. Renter's insurance typically covers only the possessions of the renter. Condominium insurance covers not only the contents, but also the part of the building that is the owner's responsibility to replace.

Condominium

In a condominium, there should be a master insurance plan maintained by the condominium association. This is typically considered a commercial policy and is paid for by the association, not the individual unit owner. (However, its cost is factored into your monthly maintenance fee.) Each unit owner should have a copy of the master policy and the name and phone number of the insurance agent.

There are two main categories of condominium master insurance: walls in, and all in, and you should know which coverage your association holds. "Walls in" generally do not cover anything except the exterior framing and doors. The individual owner's policy will need to cover the windows, floors, ceilings, fixtures, appliances, and countertops as well as their own personal possessions. In some cases, windows are covered by the master policy; check with your association to determine the exact coverages.

An "all in" master policy generally covers all fixtures, flooring, ceilings, and inside walls of the individual unit. In this case, the unit owner will need to cover only their own possessions and appliances.

As a condominium owner, it is imperative that you understand what the master policy so that you will buy the appropriate insurance for your unit.

Your association's by-laws should clearly state what type of coverage is provided within the commercial policy. Be cautioned that there is probably a deductible associated with the commercial policy. In the event of a disaster, it is generally understood that the deductible will be divided evenly among the unit owners. For example, a disaster occurred and the deductible is $10,000 and there are ten units affected. Each unit owner would be expected to pay a $1,000 deductible on the commercial policy, in addition to the deductible on their personal unit's policy.

Your individual policy will also contain clauses for liability insurance (injury to another person or her property), which will help protect you in the case of a lawsuit or other legal action against you.

Renter's Insurance

Protecting your personal assets with renter's insurance is an important consideration. Some people do not feel that they need to have renter's insurance. However, replacing your personal possessions could cost thousands of dollars. Appropriate insurance will cover most of the cost of replacement. Additionally, renter's insurance provides a level of protection against liability (injury to another person or his property). Generally, renter's insurance will be less costly than for an entire house. You are only insuring the contents (personal possessions) and liability mishaps.

Whether you own a condominium or rent living quarters, insurance is your responsibility. Talk with your agent to determine your needs and the deductible that is best for you. Although you may never need file a claim, you can be assured that the coverage is available when needed.

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