Condo insurance is important for your financial protection. Although much of your condominium is covered by your association's policy, some of it is not, and none of your personal assets will be covered.
A home owner with a condominium is in a much different situation than someone who owns a traditional house. When you own a house, except for rare circumstances, the house being insured is separate from your neighbor's house. Occasionally there is a common fence, but the value of a fence is seldom high enough to warrant attention. When a home owner insures his house, one policy will cover everything.
When a person owns a condominium, the circumstances are much different. Although you own your condo, there are many portions of the condominium that are shared by your neighbors. Unlike a fence, these shared assets are not insignificant. Not only is physical ground shared, but roofs on the exterior and walls on the interior are shared. Damage that can occur to one condo can be shared with others nearby. It is for this reason that a common insurance policy is needed. The dues that a condominium owner pays to a homeowners association are partly for the purpose of buying insurance that covers damage to assets shared among the condominium owners.
Although this type of insurance policy will cover many basic shared assets, there are many assets that are a part of your home that a policy may not cover. Your association may have a policy that covers damage to the portion of your condo that is shared with your neighbor, but will not cover damage to that portion of your neighbor's condo that is not shared. This damage may have resulted from an event that came from your home. Flooding from a plumbing problem can cause damage to your neighbor's property. The same is true with a fire that started inside your home and caused damage to your neighbor's personal assets and property that is not shared with you. Smoke damage from a fire is a common culprit for this type of property damage.
Another issue with a policy from your association will be protection for your property after improvements have been made. You may think that your property is covered, but it may not include improvements you have made to it. When the time comes to file a claim, you may find out that you will only be partially compensated for the damage to your property.
A condominium owner also needs to be alert to the possibility of being underinsured. Often a policy will cover each condominium owner equally, but the probability of certain damages occurring to your condo may not be the same as others in the complex. Depending upon the location of a particular unit, there may be certain environmental factors that make a particular condominium unit more susceptible to damage from fire and flooding than others.
Regardless of your specific circumstances, your association's homeowners policy needs to be reviewed. These policies can become confusing, and it is best to have an insurance professional read through it and explain to you any gaps that may exist between the policy and your potential liabilities.