Condominiums are a popular form of homeownership partly because they tend to be a bit more affordable than traditional single-family homes. Condominium ownership itself consists of both private and communal aspects. An individual condominium unit usually is privately owned, but community members usually own its exterior, common areas and amenities. Because of the dual ownership nature of condominiums, their insurance requirements are different, and mortgage lenders require insurance tailored just for them.
Dues Pay Condominium Master Insurance
Condominium communities are composed of individual residences and the buildings housing them, plus any land and outbuildings such as clubhouses. People owning condominiums also own a piece of their condo communities, with those communities administered by associations. Condominium owners usually pay fees or dues to their condo associations for maintenance of building exteriors, roads, walkways and for a master insurance policy. A condo community's master insurance policy covers loss and casualty against building exteriors and common areas such as roads and clubhouses.
Buy HO-6 Condominium Insurance
An individual condominium unit's insurance is paid for by that unit's owner. Most mortgage lenders require condo mortgage borrowers to buy HO-6 insurance policies covering their units' interiors against loss and casualty. HO-6 condo insurance comes in two coverage levels: "bare walls-in" and comprehensive "all-in." Bare walls-in condo insurance covers a unit from its exterior framing inward, but not its fixtures and installations such as sinks. Bare walls-in HO-6 insurance policies are the minimum required by condo mortgage lenders.
Insurance Coverage Levels
Generally, mortgage lenders require individual condo unit insurance coverage to be at least 20 percent of the covered unit's appraised value. For example, a condominium estimated at $200,000 would require at least $40,000 of unit insurance coverage. Your lender won't expect you to insure your home to its full appraised value because your condo's master insurance covers much of its structure. HO-6 condo insurance is also less expensive than traditional homeowner's insurance because their master insurance policies partially cover condominiums.
Adding Insurance Coverage
Always take care to insure your condominium's interior not only for the cost to repair or replace it but also for its contents. Contents in a condominium include any jewelry, electronics, furniture, area rugs or anything else of value you prize. Additionally, read through your condo association's master insurance policy and note its deductibles and coverage levels. You can add coverage to your unit's HO-6 condo insurance policy to cover flooding or even association insurance deductibles if you'd like.
Simplified Insurance Agency – Insurance Made Simple!
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