Insurance Read Time: 2 min

A Brief Guide To Condo Insurance

The ownership structure of a condominium unit is different from that of a single family house. Here’s what you need to know when purchasing insurance for your condo.1

1. Understand the Master Policy

Since the ownership of all common areas is shared with other condo owners, the association of owners typically purchases insurance coverage (a master policy) for the common areas, e.g., hallways, exterior walls, etc. The condo association’s policy will outline what is covered and what is not.

2. Three Types of Coverage

There are three basic types of coverage under a master policy.

  • Primary buildings and common areas
  • Your unit and any items within your unit, other than personal belongings
  • Building, unit, and any fixtures

The individual coverage you may consider depends upon the scope of coverage of the master policy. Start by determining what is and isn’t covered under the master policy – this can influence the coverage you may need.

3. Know the Master Policy Deductible

Generally, an association’s master policy has a deductible that is charged pro-rata among unit owners in the event of a claim. Determining that obligation is important because while it may never materialize, it could represent a meaningful financial commitment.

4. Consider Additional Coverage

Similar to any homeowner, you will need to make decisions about other coverage options, such as cash value or replacement coverage, adding personal liability coverage, and whether flood insurance may be appropriate.

1. Several factors will affect the cost of condo insurance, including the insurance coverage provided by the homeowners association. You should consider the amount of your deductible and level of coverage before purchasing a condo insurance policy. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

Bi-Weekly Payments

Bi-Weekly Payments

This calculator estimates the savings from paying a mortgage bi-weekly instead of monthly.

Financial Aid for Students 101

Financial Aid for Students 101

Help your college-bound child explore scholarships, grants, and more with this article on paying for higher education.

The Other Sure Thing

The Other Sure Thing

Though we don’t like to think about it, all of us will make an exit sometime. Are you prepared?

 

Have A Question About This Topic?







Thank you! Oops!

Investment Challenges of the Affluent Investor

Affluent investors face unique challenges when putting together an investment strategy. Make sure you keep these in mind.

Social Security: Five Facts You Need to Know

Here are five facts about Social Security that are important to keep in mind.

Understanding the Basics of Medigap Policies

Important as it is, Medicare does not cover the full range of health-care expenses you may experience in your golden years.

View all articles

Federal Income Tax

Use this calculator to estimate your income tax liability along with average and marginal tax rates.

Tax Freedom Day

Assess how many days you'll work to pay your federal tax liability.

Inflation & Retirement

Estimate how much income may be needed at retirement to maintain your standard of living.

View all calculators

Principles of Preserving Wealth

How federal estate taxes work, plus estate management documents and tactics.

Managing Your Lifestyle

Using smart management to get more of what you want and free up assets to invest.

Long-Term-Care Protection Strategies

The chances of needing long-term care, its cost, and strategies for covering that cost.

View all presentations

Estate Management 101

A will may be only one of the documents you need—and one factor to consider—when it comes to managing your estate.

The Cost of Procrastination

Procrastination can be costly. When you get a late start, it may be difficult to make up for lost time.

To Buy or Not to Buy

The decision whether to buy or rent a home may have long-term implications.

View all videos