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Most people believe that because they pay HOA monthly dues, they don’t need to buy condo, townhouse or HO-6 insurance.  This is usually NOT the case as the HOA Master Policy only insures the exterior of your unit and the common areas. In rare cases, the HOA policy will cover both the interior and exterior, but it never covers your contents, liability or personal property.

Most of the time, the property owner is responsible for the “walls-in.” This is also known as an HO-6 policy where the homeowner is responsible for the paint, flooring, baseboards, fixtures, cabinetry, sinks/toilets, fixed/attached appliances, etc. and their personal property.

Many associations have a master insurance policy which usually covers common areas. The exterior of the building (studs to outside walls), pool, clubhouse, walkways, landscaping, etc. is typically considered “common area”. The unit owner may be responsible for:

– Interior of the unit
– Their personal property
– Liability, which covers the actions of you, your pets and your family members living with you.

Condo/Townhome policies provide the following coverage’s (and a few more…):

Personal Property:
If you were to pick up your house/condo and flip it upside down, all the items that fall out are considered personal property; it includes your possessions you would take with you if you moved. In the event of a loss by a covered peril (fire, theft, water damage, etc.), you’ll want to replace your “stuff.” Your personal property is also covered worldwide meaning the loss doesn’t have to happen at your residence. The following types of scenarios are covered by the Personal Property coverage on your policy.

1. You are on vacation and your luggage is stolen
2. Your laptop and ipod are stolen from your car (this is a home/condo/renters claim…not auto)
3. There is a fire in your condo and your 50” plasma is burnt to a crisp.

Building Coverage:
This includes coverage for a “walls-in” policy. Building Coverage provides compensation to rebuild your condo’s interior (including drywall, paint, flooring, baseboards, fixtures, cabinets, sinks, fixed appliances, etc.). Some HOA’s hold the owner accountable for interior upgrades and will replace the unit in the building condition you originally bought it (minus any upgrades). Other HOA’s have the owner cover patios, carports and balconies. Each HOA has its own set of CC&R’s (or rules) that you need to refer to; these rules can change yearly.

Hypothetical situation: Your HOA policy only provides exterior building coverage. Your condo building has a fire and the building is considered a total loss. In this case, your HOA policy will provide the funds (up to the policy limits) to rebuild the exterior only. If you don’t have any “Building Coverage” on your specific condo owner’s policy, your condo will be a shell with concrete foundation…no drywall, no cabinets, no flooring, etc. At your expense, you can rebuild the interior. This is why Building Coverage is so important.

Loss Assessment:
In the event your HOA issues an assessment, you could potentially make an insurance claim up to $50,000 to pay for covered damages…as long as it’s the result of a covered claim.

Additional Living Expenses:
If you are unable to live in your condo because of a covered loss, your insurance policy will pay for expenses (food + lodging/housing) incurred while your home is rebuilt/repaired to livable standards.

This coverage pays for bodily injuries to other people, damage to their property and potential lawsuits if you are liable. The unintentional actions of you, family members living with you (qualified family members) and your pets are covered. Here are a few examples of covered liability claims.

1. In the grocery store, you accidentally bump into someone with your shopping cart and they fall over, incurring medical expenses.
2. Your best friend/dog shows excitement and jumps up on someone; they fall and become injured.
3. A friend comes to the house, trips on a piece of carpet sticking up, loses balance and smacks their head on the corner of the coffee table.

When considering insurance for your condo or townhome, it is important to talk to your HOA and refer to the CC&R’s (the rules for your association/community) to find out what you are responsible for insuring. An insurance agent (try Einhorn Insurance) can help provide recommendations on the amount of building coverage and a comprehensive policy to meet your needs.

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