In Rhode Island, Condo insurance isn’t as straightforward as homeowners insurance for many reasons. First and foremost, a condo is within a building with multiple units and requires insurance for your personal space, plus collective insurance on the entire building.
In most cases, the owner pays an association fee that covers their portion of the collective, or “master,” insurance policy. Second, master policies and their coverage vary. Just because the condo association has insurance it does not mean that you’re properly protected. Here’s why.
Master Insurance Policy Types
Condominium associations choose the level of coverage for the building. Generally, this includes three policy choices:
This provides the least coverage. It covers the exterior framing of a unit and the collectively owned structures and items.
In this case, the condo owner needs extensive personal coverage as everything inside the framing is unprotected under the master policy.
This provides coverage for all repairs to return it to its previous state before a covered loss. This includes replacing fixtures, appliances, and condo owner improvements.
In this case, the condo owner may require less personal coverage for repairs, but will still need protection for personal property.
This coverage protects all property in the complex, except the condo owner’s personal belongings. Unlike all-inclusive coverage, it does not cover fixtures, appliances, and condo owner improvements.
Blend Condo and Master Coverage
Clearly, it is important to know what level of protection your condo association’s master policy provides. In some cases, it will provide little or no coverage for your personal belongings, fixtures, appliances, and improvements and leaving gaps between these coverages can be extremely costly.
Besides the obvious need for proper protection for your unit and belongings, you also need to protect yourself against liability. The master policy handles liability in common spaces and the exterior of the property, but not in your unit. If someone injures themselves within your unit, you could be on the hook for legal fees, medical bills, and a settlement.
An HO-6 or condo policy generally covers most things not covered by your HOA. It protects your personal property and offers additional benefits. For instance, if you can’t live in your condo after a loss you can claim eligible expenses up to the policy limit while you live elsewhere.
If you include “loss assessment” coverage in your condo policy, it will cover part or all the cost of damages above the HOA’s policy limit, instead of having to contribute cash to make up the difference.
An HO-6 policy should be specifically tailored to fully realize its benefits and eliminate overlap. The cost depends on many factors including location, construction materials, HOA coverage, and the limits and deductible you choose for your policy.
Condo owners should conduct a home inventory to properly estimate the value of their belongings. Free or inexpensive apps can simplify the process. Provide it to an independent insurance agency like ours so that we can use the information to properly align your coverage. We’d be happy to review your coverage options with you. Give us a call, today.