Do you even need homeowners insurance for a condo or townhome?
The short and swift answer here is, “yes, absolutely.” Especially if you take out a mortgage on your home (your lender will probably require insurance). Where things get particular is that a standard homeowners insurance policy is not what you need. Condominiums and townhomes that are part of homeowners associations require a specific type of insurance policy, referred to in “the biz” as an HO6. The short situation here is your home will be covered by two policies: a master policy that covers the entire building and common areas, and your individual homeowners (condo) policy, which covers the interior of your unit and your personal liability.
Let’s break it down.
What’s covered by my condo insurance policy?
Your condo insurance policy provides coverage for the interior of your individual unit, which extends to your personal property, furniture, and any other items or mechanics inside the home that are your responsibility to upkeep. Your individual policy also extends liability protection to you in the event of an accident occurring not only inside your unit but anywhere in the world. This is also where you would add endorsements for coverage on jewelry, antiques, or other needs that are unique to you.
What’s covered by the master condo insurance policy, then?
The master policy is what the homeowners association buys to cover the entire building. You will join the association and pay fees/dues that contribute to the maintenance of this insurance policy. This is the policy that covers damage to common areas (like hallways, the roof, elevators, recreation rooms, amenities, etc.), as well as general liability for incidents that occur in those common areas or for which the association would otherwise be held responsible.
The trick to making sure the policy you buy for your unit is appropriate for your needs is to carefully go over the master condo policy to determine what’s already covered, to what limits, and weigh that against the level of coverage you need or want for your unit. As an example, perhaps you want flood insurance, but the master policy does not include it. You could purchase that coverage individually to extend coverage to those risks.
If you own, or are considering purchasing a condominium and want to go over your options, the best resource is an agent. And whether you have a mortgage requiring it or not, insurance is simply a good thing to have.