If you live in a condo, you may think that your association has taken care of all of your insurance needs. However, the association’s insurance policy may only cover the exterior of the building. If you want coverage for the inside of your condo – including all of your personal belongings – you’ll need to invest in your own condo insurance policy.
The problem? At first glance, condo insurance can be a little tricky!
You’ll need to get coverage that corresponds to your association’s master policy, but the details can vary from association to association. For example, some associations only insure the exterior walls – meaning that if anything goes wrong with the walls inside your specific unit, the association’s insurance policy won’t kick in. Or, in other cases, the association’s insurance covers the bare walls and the bare floor – but you’re responsible for insuring everything within/on top of them. A quick look at your association documents will tell you what kind of insurance they have – and, thus, what you kind of policy need.
But do you really NEED it? Yes! And here’s why:
1. Because your lender most likely requires you to have it
Many of the lenders around the Golden State started requiring condo insurance after the housing crisis in 2008. Further, your lender may require you to have a specific policy limit. (You can always exceed this limit if you want to, but you’ll at least need to meet the minimum requirement.) So, if you plan on getting a mortgage, plan on getting condo insurance.
2. Because condo owners love to upgrade things
Odds are you’re going to make your condo your own after you move in. However, if your association’s insurance only covers the bare floors and walls, you’ll need your own condo insurance if you decide to make any upgrades – like if you install those gorgeous new hardwood floors or that striking new glass back-splash. Otherwise, those changes won’t be covered if the worst ever happens.
3. Because a fire is a legitimate threat
Your California condo isn’t just at risk of catching on fire because of a candle left unattended, a dropped cigarette, or old wiring. Here in the Golden State, you also face a size-able risk of falling victim to a wildfire. In the first four months of 2015, CAL FIRE responded to more than 1,100 wildfires. That’s higher than the average (thanks to the historic drought), but even in a “good” year, California suffers hundreds of wildfires and thousands of burned acres.
Another fire threat you may not have thought of? Arson. According to the California Attorney General’s Office, there were more than 1,200 residential arson cases in 2014. So, Mother Nature may not be the only one who puts your investment up in smoke!
4. Because burglars are an even bigger threat
According to the California Attorney General’s office, there were nearly 232,000 burglaries state-wide in 2014, and the majority of them were committed in residences (as opposed to businesses). If you don’t want to suffer a major financial hardship if your stuff is ever damaged or stolen, you’ll need condo insurance.
5. Because you don’t want to be on the hook, legally
If you get HO6 insurance (the industry’s name for standard condo insurance in California), it will come with liability coverage. That means if someone gets injured inside your condo – like by slipping and falling, for example – your insurance policy will kick in to cover medical AND legal expenses. The last thing you want is to be responsible for these yourself, because they can add up very quickly!
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