When you rent a property, be it a house, condo, or apartment, you are paying for use of the property and don’t have any ownership interest in it. When you buy a condo, you own your unit, but the exterior of the building, the common areas, the grounds, etc. are collectively owned by all of the unit owners and are typically controlled by the condo association. Normally the condo association purchases a “master policy” and each unit owner is only responsible for their unit on a “walls in” basis but it’s important to know your specific situation if you own a condo or are thinking about buying one.
Renter’s insurance, otherwise known as the HO-4 policy, offers you, as the renter, a certain amount of coverage for your personal property, personal liability and other policy coverages/extensions. You’ll have to estimate how much it would cost you to replace your property if your entire dwelling burned down and everything you own was destroyed. Keep in mind that you will have to offer some sort of proof as to the value of your belongings. Taking pictures or video area a great way to document what you own and the condition it’s in. Without documentation, it may be difficult to determine a proper value of your belongings in the event of a total loss.
A renter’s policy also includes loss of use, which covers alternative housing, like a hotel, if your unit is temporarily unlivable. You will also receive liability and medical payments coverage to help cover expenses if someone is hurt due to your negligence or if someone tries to sue you for an injury or damage to his/her property.
Condo insurance, otherwise known as the HO-6 policy, covers the interior of your unit, but not the exterior. Traditionally, you own everything “from the walls in” when you buy a condo – so you own the drywall, any fixtures in the condo, and anything else attached to the unit like window treatments and carpeting. The condo association owns everything from the studs out, including the common area hallways, roofing, outside landscaping, and anything else that is used by residents of the complex.
Condo insurance policies include not only this modified type of building coverage, but also include personal property coverage, loss of use, medical payments, and liability coverage.
The key difference in determining what you need is whether or not you have purchased the property or are simply signing a rental agreement. You can certainly rent a condo that is owned by another person, but in doing so you still only need renter’s insurance for your belongings. The owner would still be responsible for the proper building coverage for his condo unit.
Not sure what you need? Call your insurance agent for help determining the right policy for your situation and enjoy peace of mind.