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Condo and Renters Insurance

Even though your cozy rented apartment or your luxury condo feel just like home, the type of insurance you need to protect yourself and your belongings in a rental or a condo is different from regular homeowners insurance. The main difference between a renters insurance policy and a condo insurance policy is dwelling coverage. Now, I know what you’re thinking, the word dwelling has a connotation that makes you think of the hut that The Seven Dwarfs live in. In the real word, in terms of renters and condo insurance, the dwelling refers to the physical structure of a place of residence. To put it simply, renters insurance does not include dwelling coverage and condo insurance does include dwelling coverage. Now that I can’t stop thinking about the Seven Dwarfs, let’s get to the specifics.

If you are renting your home, it is highly recommended that you protect yourself and your belongings with a renters insurance policy. Just because you don’t own the home you live in does not mean that you would not suffer extensive losses in the case of a disaster, such as a fire or strong winds. Renters insurance policies do not include any type of dwelling coverage because the owner of the building would be responsible for having a policy to protect the physical structure in case of any damage. What renters insurance does cover are your personal belongings within the walls of your home, not including the physical structure. This type of homeowners insurance policy for renters is called an HO4 policy, and protects the personal belongings of the renter in the case of several incidents including fire, wind, explosion, theft, etc. Pretty much any unpleasant event you can imagine happening is covered, except for a flood or earthquake. Floods and earthquakes seem to think they are more special than other unexpected mishaps and require a separate insurance policy.

There are two main types of renters insurance policies: actual cash value and replacement cost. It is important to take the differences between these types of policies into account and decide which type of coverage is best for you. An actual cash value policy pays the current value of each item at the time that it was damaged or stolen. So, if you have been keeping your old school electronics to hold onto your youth and they are destroyed in a fire, your insurance company will only pay what they are currently worth today minus your deductible, not what you paid for them back in the 90’s. With a replacement cost policy, the insurance company will pay the original cost of the item, minus your deductible, so that you can afford to buy a true replacement of an item that you lost. Certain high value items such as antiques, jewelry, or electronics may have limitations on how much the insurance policy is willing to pay for replacement, and this payment cap varies from policy to policy. Whether you have a replacement cost or actual cash value policy, it is important to take detailed inventory of all of your possessions with photos and descriptions, so that in the case of a loss you are well covered. Even though no amount of money can replace items with high sentimental value that are lost, a fat check from the insurance company certainly will help ease the pain.

There are other specific benefits that are included in renters insurance policies as well as condo insurance policies. Most of these insurance policies include liability protection for physical injury or property damage. In simpler terms this means that if a guest is hurt in your home and sues you for it, as any well-mannered guest would, then the insurance company will cover any costs within your policy liability limit. Or, if any damage is caused to the dwelling of your rental home or condo and it is your fault or a guest’s fault, liability protection will also save you from paying out of your pocket. Lastly, if for some reason your rental home or condo becomes no longer inhabitable due to extensive damage, most policies will cover additional living expenses that you incur due to this unfortunate event. The insurance company won’t pay for a penthouse at The Palace Hotel, but they will pay up to a certain amount of money so that you can temporarily move to a more suitable living space.

When it comes to Condo insurance, it is important to first know what type of insurance policy that your condo association has. There are two main types of policies that a condo association may have. A “single unit” policy covers the physical dwelling of your condo, exterior and common areas, and permanent fixtures within the walls of the condo such as appliances, plumbing, and wiring. A “bare walls in” policy covers the physical dwelling of your condo and exterior and common areas, but does not cover anything within the walls of the condo. Knowing the type of policy that your condo association has is important because your personal condo homeowner’s policy should cover everything that the condo association’s policy does not. Therefore, your condo insurance policy should cover your personal belongings and, depending on your condo association’s policy, permanent fixtures or interior improvements inside your home.

The type of policy that you need to protect your personal belongings and yourself as a condo owner is an HO6 insurance policy. This type of coverage, just like renters insurance, generally provides liability protection as well as protection of your personal belongings. So if you accidentally cause damage to your dwelling or exterior areas of your condo, or a not-so-friendly guest gets hurt in your home and decides to sue you, you’re covered. An HO6 policy, just like an HO4 policy, protects a wide range of unfortunate events and mishaps that could cause a loss, such as fire, theft, or storm damage. It is essential to keep an inventory of your personal belongings and their value, so that whether you have an actual cost value policy or a replacement cost policy, you can get the money you need to cover your losses. Buying the right condo insurance is very dependent on knowing the coverage that you are responsible for as the condo owner. If you are in the market for a condo or looking for a policy to cover your home, make sure you read up on what your condo association’s policy covers so that you know exactly what coverage you need to make sure is included in your own condo insurance policy.