Renter’s and condominium owner’s insurance products are very similar in that they are intended to protect the resident’s possessions in the event of a loss. Neither policy covers the physical structure or other common areas of the property. However, there are also some very important differences, and condo owners often have greater responsibilities than renters.
One of the biggest differences may be in what the residents or owners are responsible for insuring. Renters are responsible only for their own possessions and any improvements they may make to the rental unit-new carpeting, for example. They never need to insure original fixtures within the rental unit.
Condo owner’s responsibilities vary according to their condo association’s insurance policy. The association’s master policy typically covers the building and common areas, like a swimming pool, that are considered owned by all unit owners. Master policies differ in how far into individual units they extend. It is important for condo owners to understand exactly where their association’s responsibility ends.
Single entity policies cover certain fixtures within the unit, like appliances, cabinets and carpeting. Then, much like a renter, the condo owner is responsible only for possessions he brings into the unit. The condo owner is also responsible for any upgrades made to the fixtures. If he upgrades the stove, for example, he will be responsible for the difference between the value of the original stove (which the master policy still covers) and what the upgraded stove is worth.
A bare walls association policy covers nothing within the unit, and the unit owner is responsible for all fixtures. The association’s master policy should spell out exactly what it covers, so that you can figure out where your responsibility begins.
Another big difference between renter’s insurance and condo owner’s insurance is the inclusion of loss assessment coverage. Renters are never responsible for losses to common areas, unless the loss is due to their negligence. Condo owners may be responsible for a portion of the losses to common areas if the association’s insurance policy does not cover the full amount. The condo association may charge owners a loss assessment to cover the difference between what its policy pays and the actual cost. Condo owner’s insurance can help cover these assessments.
In short, condo owners’ insurance policies cover the same things as renters’ insurance policies, but may include additional responsibilities that renters need not worry about. Renters only need to determine the value of their belongings and how much liability insurance to carry. Condo owners need to take the extra step of understanding their association’s master policy in order to fully understand their insurance responsibilities.
Your insurance agent can help you determine the policy best suited for your circumstances, whether you are a renter or a condominium owner.