Acquiring an investment is a significant financial decision and equally so is the protection of said investment. This very logic holds true for a real estate buy and hold investor who purchases a condominium. Insurance is a necessity; however, it’s important to keep in mind there are different insurance policies for condominiums versus single-family homes. Making sure the appropriate coverage is in place can mitigate risk of any future loss or damage to this rental property.
Understanding the Terms of Your Policy
Coverage options and availability vary for different property types and are defined in the terms of your individual policy. For instance, the coverage on a condominium is not the same as coverage on a single-family home and is also dependent on the property’s classification as a primary residence or a rental property.
The main objective is … Carefully read and understand the conditions and terms of any insurance policy to ensure your investment is adequately covered – but particularly for condominiums – before signing on the dotted line.
HOA Coverage vs. Personal Property Coverage
A major difference in insurance for a condominium as opposed to that of a single-family home is individual condo owners share insurance liability with the homeowners’ association. It is important to note what specific events and damages are covered by which policy.
Personal property coverage typically includes:
HOA master insurance policies usually provide for the following:
HOA policies vary by the particular needs of each individual association. It’s important to understand not only the coverage provide in the master insurance policy but also the bylaws of the HOA. If a management company assists the homeowners’ association, they can be a good resource for information regarding specific policies and coverage.
Regional Coverage
Location, age of structure and susceptibility to natural disasters are just a few of the factors in play when insurance premiums are determined. For instance, if the condominium is located in a neighborhood known to flood, you probably will pay more for your policy. The National Association of Insurance Commissioner’s Homeowner’s Insurance Report is the most comprehensive collection of homeowners insurance data in the world. If you’re interested in learning how your region fares, this report provides the most recently validated data on market distribution and average cost by policy form and amount of insurance.
Quotes
Soliciting more than one quote will ensure you are able to compare coverage options against price and deductible and select the policy that will work best for you. There are many large insurance companies who can provide condominium coverage; however, you might consider consulting your local business association to find a highly rated local insurance company or ask friends and acquaintances for a referral.
Be Informed
Insuring your new investment property with the right policy and appropriate coverage is the best way to guarantee peace of mind and save money in the long-term. Remember to ask for the homeowners’ association’s master insurance policy; ascertain if flood insurance is necessary; and compare multiple quotes before deciding on a policy.