The Importance of Your Individual Condo Insurance Policy

Home insurance is designed to protect your property and investment from a wide range of risks, such as fire, explosion, theft, natural disasters, and liability issues, etc

It provides you with financial security and peace of mind, knowing that you have an ally to back you up against the financial burden caused by unexpected events. However, when it comes to individual condo insurance, property owners often rely on the coverage provided through the Master Policy of the Building (also known as HOA Policy) taking for granted that it will cover their unit against anything that could happen.

Unfortunately, it is not until after an incident has occurred that a Condo Owner realizes the Master Policy wasn’t enough and they have to face this financial impact on their own.

In this blog article, we’ll delve into the main reasons and benefits of having an Individual Condo Insurance policy, so that you can make informed decisions when it comes to protecting your assets, your peace of mind, and financial stability:

The Master Policy Against Natural Disasters

1) “Hydrometeorological Phenomena”, also known as Hurricane / Severe Weather

Although most Condo Buildings have a Master/HOA Policy, it is also true that a significant percentage of them don’t have coverage against certain risks, especially Hurricane / Severe Weather (Hydrometeorological Phenomena). The reason is that this coverage is the most expensive out of all risks that can be covered by a Master Policy, so most boards of directors decide not to add that coverage to the policy.

If your unit were to suffer structural damage due to a hurricane, tropical storm, mudslide, hail, frost, tidal waves, snowfall, stormy winds, or any other similar event that would fall under that category (Hurricane / Severe Weather), the Master Policy would not be able to cover those damages.

However, with your Individual Condo Insurance policy, you can get the coverages you want/need including “Hurricane / Severe Weather”, thus avoiding the uncertainty of what the HOA/Master Policy may or may not cover.

But what if the HOA/Master Policy DOES have coverage against Hurricane/Severe Weather?

In that case, it might cover the damages caused to your structure, but you’d have to meet the deductible first, which in most cases would be a percentage of the value of the entire complex or building. Very likely -and in most cases for that matter- it will be a better deal for you to repair your structure than paying for the deductible.

Also, keep in mind that if the Master Policy were to cover damages caused by a Hurricane / Severe Weather, it would only be for the structure. The contents would not be covered by that policy.

On the other hand, with your condo unit policy, you’d only have to meet the deductible of your structure or contents value, which will be thousands of times (figure of speech) more affordable than that of the Master Policy.

2) What if there is no Master Policy at all?

We’ve already mentioned that a significant percentage of Buildings don’t have coverage against certain risks, right? Well, there is another percentage of Buildings with no coverage at all. Some buildings have an emergency fund to deal with different risks, but the truth is that in the event of a catastrophic situation, such an emergency fund would not be enough.

Your investment of a lifetime can be at risk if there is no policy for your building. This uncertainty can be waived by having your own policy, which is, on average, less than 1% of the cost of your property.

As a general condition, the Master Policy does not cover damage to the contents of your unit, except for special negotiation.

Through your Condo Unit policy, you can protect all of your contents at a very reasonable cost against multiple risks such as Fire, Lightning, Explosion, Earthquake, and Hurricane/Severe Weather.

Third-Party Liability

Although the Master Policy offers Third-Party Liability, it is not meant to cover the damages for which a condo owner is responsible, or that occurred inside the owner’s unit.

Your Condo Unit policy, on the other hand, is ready to step in when you are held liable for damages caused to third parties (persons and properties), thus protecting you from financial stress and risk when facing these types of situations on your own.

Extraordinary Expenses

This benefit, which isn’t as known as it should, can be of great help in case of a claim. It’s basically financial support provided by the insurance company if your property becomes unhabitable due to a covered claim. This financial support allows you to rent a property similar to the one you own while yours is being repaired.

Other coverages available

Some of the additional coverages you can acquire to suit your specific needs are only available through an individual condo unit policy, i.e. electronic equipment, jewelry and artwork, loss of rental income, legal assistance, home assistance, accidental glass breakage, etc.,

For all the reasons mentioned above, the importance of having your Individual Condo Insurance Policy becomes evident, especially considering the peace of mind it provides in exchange for a very affordable cost (less than 1% of the value of your property).

Now you know how to protect your home and finances without relying on uncertainties