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6 condo insurance questions

To state the obvious, a condominium is not the same thing as a house. Usually, there's no backyard or basement, and you don't have to worry about cutting the grass or shoveling a front walk.

Insurance is another area where homes and condos differ. Condo owners are typically responsible for insuring just a portion of their property on their own. However, rules differ from complex to complex, and it's important to ask the right questions to ensure you have proper insurance coverage.

Here are six things you need to know about insuring your condominium.

Condo insurance
Condominium owners have unique insurance needs. Ask yourself these questions to make sure you are properly insured.
1. What does your master policy say? 
Owners of condominium units obviously do not own the entire condominium complex. Typically, they own their own unit outright and share ownership of the rest of the complex with all the other owners.

From an insurance point of view, that means all individual unit owners have a collective responsibility for insuring areas of the complex owned in common -- building exteriors and hallways, the pool area, etc. A condominium association typically collects monthly dues from unit owners and uses a portion of these funds to insure common areas.

Meanwhile, the unit owner typically is responsible for separately insuring everything within the four walls of his or her individual unit.

The condo association's master policy, as well as association rules, should spell out clearly which parts of the complex are insured through association dues, and which parts are not.

There are two broad categories of master polices, according to Steve Slattery, property underwriting manager of Liberty Mutual Group in Boston.

Two types of master policies
  1. Bare walls-in. Covers all real property from the exterior framing inward, but does not cover the fixtures and installations within the condo unit. So, things like granite countertops, bathroom and kitchen fixtures, and the flooring are not covered by the master policy. This condo owner will probably have the greatest coverage need, according to Slattery.
  2. All-in. Covers fixtures, installations or additions within the interior surfaces of the perimeter walls, floors and ceilings of individual units. This condo owner will probably have a more limited coverage need, according to Slattery.

There are also variations of the two types. These details should be spelled out in the condominium association bylaws.

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"Most bylaws will talk about anything within the four walls of the unit you own," says Matthew Cullina, director of product management for MetLife Auto & Home in New York. "Everything else is owned by the condo association ownership. Knowing specifically what you own when you buy that condo is the first thing I recommend."

2. How expensive is the association deductible? 
Condo association insurance typically includes commercial insurance coverage for the commonly shared building and common areas. Such policies typically have an association deductible.

"Basically, in the event of a natural disaster or hurricane or whatever, it is spelled out in the policy," Cullina says. "If the condo association needs major work or there is major damage to the structure, the condo association will tender the claim to their commercial insurer and they would get covered for their loss."

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