When one buys a new condo home and utilizes a mortgage loan to do so, the lender will usually mandate that proof of an insurance policy be provided that aligns with their guidelines. The mortgage is secured by the condo property, thus keep in mind that any loss to the condo decreases the value of, what is in actuality, the collateral; that is until whatever damage that caused the financial loss is dealt with. Knowing this makes it obvious as to why a mortgage lender would mandate a condo owner to obtain insurance so to ensure that funds are on hand to repair or replace the “collateral” as required. However, the same holds true for the condo owner due to the fact that he or she is also vulnerable to significant financial loss if a condo is damaged. Therefore, it makes perfect sense to carry coverage on a condo even if you own it outright.
There are quite a few kinds of coverage available in good condo insurance policies. The first kind is protection for property, which compensates the condo owner for repairs or if needed, total replacement of the condo. Keep in mind that condo owners specifically own only the interior of their units. The exterior aspect is under the auspices of the HOA (owners’ association) in the majority of cases. Next is the personal property insurance coverage, which is what provides benefits that financially safeguard one’s condo’s interior contents. For instance, one can financially cover their wardrobe, appliances, electronics, artwork, and furniture. Another coverage option that is usually a part of a condo policy is liability coverage. When others are hurt on a policyholder’s property, you can be financially liable for whatever related costs incurred. Normally this would be medical expenses, but it can also include other costs.
When one buys a policy, he or she is often afforded the ability to purchase a myriad of optional coverages as well. For instance, earthquakes, flooding, and, often as a result of water damage, mold will not be covered in the normal policy and must be purchased as “riders,” aka supplemental coverage. You can opt to add these supplemental coverages, and you can choose various coverage limits. Another aspect for which you have control is the deductible amount you must pay prior to coverage kicking in. Keep in mind that, in general, the higher the deductible, the lower can be one’s policy premium. Remember, it is wise to make a well-informed decision when acquiring coverage so as to ensure your property and loved ones are protected along with your ability to handle the costs when the need arises.
