Many condominium owners assume that their apartment is covered under the policy offered by their Condominium Association. Typically, your monthly condo fees are used to fund a building insurance policy, which will not provide any coverage for your personal possessions, nor will it offer you any protection from personal liability.
You have to know that there are two separate policies to protect your investment:

   1.   A ‘master policy’ provided by the condo board, which covers the common areas which you share with others in your building like the roof, basement, elevator, boiler and walkways for both liability and physical damage.

Unit owner is usually responsible, as minimum, for the following items:

• floor coverings, wall coverings and ceiling coverings (paint, wallpaper, etc)
• electrical fixtures, appliances
• air conditioning or heating equipment
• water heaters
• water filters, built in cabinets and counter tops
• window treatments, including curtains, drapes, blinds and hardware
• replacement for any of the above listed property
• air conditioning compressors that serve only one unit no matter where located

     2.   Your own insurance policy (HO-6)
This provides coverage for your personal possessions, structural improvements to your apartment and additional living expenses if you are the victim of fire, theft, or other disaster listed on your policy. With this policy you also get liability protection.

To protect your belongings and yourself, you need to purchase a personal home insurance policy, which is designed for condos apartments and includes the following key coverage’s:

• Building Property covers the unit features that are an owner’s responsibility including finishes (wallpaper, flooring), fixtures (lightning, cabinets), unit alterations and additions.
• Personal Property covers items like clothing and furniture.
• Loss of Use covers certain expenses if a condo is damaged or uninhabitable.
• Additional Living Expenses covers the expenses in excess of what the insured would normally have spent for food, shelter and related items, for the shortest time required to repair or replace your unit or to relocate
• Elsewhere for a certain period of time.
• Loss Assessment will pay the insured’s share of a special assessment required if the association has an insured loss and the insurance does not cover it.
• Personal Liability pays the insured legal liability for financial damages resulting from someone being injured in the unit. It also pays for legal defense against these claims or suits.
• Medical Payments to Others pays necessary medical expenses for guests who are accidentally injured.

Here are some steps to a well-designed HO-6 policy:

1. Read a copy of your association’s declaration document. Make a list of building items not covered by the association’s master policy.
2. Estimate the replacement cost of all structural items that are your responsibility.
3. Make sure you know the master policy deductible.
4. Add special ‘perils’ coverage to Coverage A (Building Property/Dwelling) and your personal property, you will be covered for more losses (e.g., water damage to walls and ceiling from roof leaks).
5. Add sewer backup and sump pump failure coverage.
6. Determine the need for floor or earthquake coverage.
7. Buy adequate liability coverage (e.g., $500,000) in limits equal to your other personal liability coverages.
8. Consider buying an umbrella policy that includes non-profit D&O (directors and officers), in case you ever serve on the board.

Insuring condominium units is a very confusing and difficult topic for most of co-owners.  Most people know that there is an insurance article in the condominium bylaws but very few have read it carefully and fewer still understand its requirements. That is why you should consult an insurance agent.

Cost of such coverage is relatively low – averaging from $200 - $300 a year.