It is vitally important to fully understand the insurance considerations when purchasing a condominium. To begin, undertake a review of the section of the condominium documents pertaining to insurance coverage on the common elements of the community. Request a copy of the specific insurance coverage documents from the developer (if buying new) or the seller (real estate agent) if purchasing a resale.
In the event of a partial or total loss, you will want to know exactly what will be covered by the Condominium Association insurance policy. Specific items to look for are water damage due to plumbing either inside your condominium unit or damage caused from another unit's plumbing or common plumbing component. Water damage caused by leaks inside your condominium unit or water damage incurred from another unit owner or common component. Fire damage caused by a fire starting within your unit or within another unit of the complex.
Due to recent hurricane damage in New Orleans, it is important to understand the coverage provided by the Condominium Association and that provided by any additional insurance coverage purchased for your condominium. If there is a large deductible for windstorm damage under the Condominium Association insurance policy, understand whether the amount of any deductible has been properly reserved within the Association budget or whether any deductible loss would be charged to the unit owners via a special assessment to all condominium owners within the complex.
Once you have determined the coverage provisions that the condo association will cover, you will want to obtain mutliple condo insurance quotes from reputable insurance brokers. Rates will vary depending on location of the condo, proximity to the coast, construction and other typical underwriting factors.
Generally speaking, the contents of your condo should be covered up to the amount it would cost to replace your belongings with items of like kind and quality. This type of coverage may cost more than actual cash value at the time of loss but it provides for the most protection. When renting your condo, be sure that your insurance coverage will cover any losses due to the renter's action or inaction.
