10/12/2018 By Agent Ken CobbBy Agent Ken Cobb
Are you buying a townhome in Deep Rock, Vista North, the Meadows, North Ridge Cottages or South Shore Villas here in Bemidji? Or perhaps you own a more traditional condo. Either way, you may be wondering what sort of insurance you need, if any.
The insurance that you need for your townhome or condo is likely different than what you’d buy for a single-family home. In many of these developments, your owner association buys a single policy to insure the shared buildings. So do you still need your own insurance coverage as well?
The answer is yes. While your association may be insuring your dwelling’s structure, you have several insurance needs that this common policy won’t meet.
First, it is your responsibility to cover your personal property. From your furniture and appliances to your clothes, kitchen ware, sporting goods, jewelry, electronics and all your other household items, the stuff you own could cost a lot to replace if there were a fire or other loss. Because your things are owned by you and not shared by the association, your association cannot insure them; you have to.
Second, you may also need to insure all or part of your home’s interior. While most townhome and condo associations in our area insure the majority of the structure (such as the framing, siding and roofing), you could be responsible for all or part of what’s inside. Because every association seems to have their own rules for this, it is important that you read your association documents carefully. Some associations may require that you insure from the drywall in (which could include cabinets, flooring, plumbing and lighting fixtures, your furnace and hot water heater and much more), while other associations might cover everything except for improvements or upgrades that you make. And there are many variations in between. Either way, you will probably need some coverage for the interior of your home; the main question is how much.
Third, you will need your own personal liability protection. While your association should have its own liability coverage in place, that only protects the association. If there is an injury on your premises and both you and the association are sued, you need liability coverage in your own name as well. (Personal Liability coverage also covers a broad array of additional exposures you face.)
Forth, it’s also wise to purchase increased loss assessment coverage with your policy. If your association suffers a loss that is subject to a large deductible, is over the insurance limit or is not insured at all, your association might have to assess you and other members if it doesn’t have enough funds in its checkbook. Loss assessment protection can cover this unexpected expense for you, if the loss was something your policy normally covers. Here’s a couple examples. 1) Someone is seriously hurt in a common area and sues the association for more than its insurance limit. 2) Your association switched to a high wind & hail deductible to save premium and then has a lot of building damage from a severe storm.
So, what kind of a policy will provide these coverages for you and what will it cost? What you need is “Unit Owners” or "Condo Owners" insurance, also known as a “HO-6 policy”. With this policy, you can choose the limits that you think you need for personal property, your dwelling’s interior, personal liability and loss assessment. Because this type of policy isn’t covering your home’s exterior, it will usually cost a lot less than a regular homeowners policy. While your premium will vary depending on the limits you choose and other factors, most of my townhome and condo clients pay between $150 and $350 per year for their coverage.
This post only provides general, summarized information regarding the subject matter. It is important that you read the terms and conditions of your insurance policy carefully.
About the Author
Agent Ken Cobb
Ken is the owner and principal agent at Pine Country Insurance in Bemidji. Active in the insurance industry since 2000,Ken uses his years of personal insurance knowledge and experience to assist clients in customizing insurance coverage to fit their needs. Ken considers himself a "farmer" rather than a "hunter"; rather than focusing on writing a lot of new policies as quickly as possible, he works on cultivating long term relationships based on trust with his clients. When writing new policies and meeting for annual reviews, Ken spends time with his clients explaining and helping them understand their insurance, and he is also pleased to share his knowledge with his blogging audience as well.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.