Buying a condo can be a highly advantageous real estate move for some people. It’s not for everyone, but it comes with clear benefits that make perfect sense for certain individuals. The ideal condo buyer is usually either a single person or a couple with no kids at home. Condo owners are willing to pay for done-for-you maintenance and property upkeep. They appreciate the rules and uniformity that protect the property’s aesthetic, and they enjoy the variety of on-site amenities.
Owning a condo is not a completely hands-off arrangement, though. As the owner of their unit, even if not the full building, condo owners in Pennsylvania still need property insurance. Since condos are not as common as single family homes in Montgomery and Bucks Counties, buyers may not be fully informed about what kind of insurance they need. Unfortunately, their real estate agents are not usually experts, either. And of course, the selling agent’s loyalty is to the property owner, so they don’t reliably tell the full story. If you are considering buying a condo in Towamencin, King of Prussia, North Wales, Montgomeryville, or Lansdale, whether it is a traditional condominium complex or 55+ community, make sure you understand your Condo Insurance coverage needs.
What Does the Condo Association Insurance Cover?
Condo Associations carry what’s called a Master Policy. This is coverage for the building structures, pipes, common areas, and recreational facilities. It is a comprehensive property and liability policy that protects the owners of the building and property.
This policy does not cover the individual units or their owners. When buying a condo, individuals should always request a copy of the Master Policy and have it reviewed by their homeowners insurance agent. Understanding this policy is critical for condo owners so they can carry the right protection for their own needs. Condo buyers must also read the Condo Association’s by-laws so that they fully comprehend what they would be expected to pay in the event of a building catastrophe, such as a fire.
The downside of owning real estate within a larger piece of real estate is that the owner of the bigger piece of property has the most decision-making power. If the Master Policy for the Condo Association limits the maximum payout to something less than it would actually cost to fully restore the building, individual unit owners will be responsible for making up the difference.This is called Loss Assessment coverage, and it is typically spelled out in the Master Policy. Experienced insurance agents know that they need to look for this so that they can properly advise their clients about the amount of coverage really needed.
What Kind of Homeowners Policy Do Condo Owners Need in PA?
The Condo Insurance policy is called HO-6, and it is a type of homeowners insurance. Unlike renters insurance, which only covers the renter’s personal property inside an otherwise owned unit, condo insurance covers a certain amount of the building property.
Insurance agents simplify condo insurance coverage by saying that it covers “from the drywall in.” This means that everything inside the unit, including a few elements of the building structure, are covered as part of the condo owner’s property. There are some behind the scenes mechanical systems that are also covered under a condo owner’s policy. The general list includes:
Many condo buyers get confused about their responsibility for the permanent elements and mechanical or electrical systems associated with the unit. They believe that the Condo Association has more responsibility, and so they are ultimately disappointed at how much insurance is really needed to protect their home.
Although people who are downsizing from a single family home may be annoyed at just how much insurance they still need to carry, they are at least familiar with the terms of the policy. Apartment renters who are purchasing a condo as a first time homebuyer are far more oftensurprised and upset about the level of coverage that falls to them.
Mortgage companies require HO-6 insurance policies in order to approve a loan for purchasing a condo. While it’s possible to just purchase the minimum coverage to get the mortgage, this is not always the best choice. A more comprehensive policy will take the Master Policy and by-lawsinto account to ensure that the condo owner can financially survive a major loss event. Every detail matters when restoring your home to an inhabitable state partially depends on another entity’s responsibility.
Review Your Condo Insurance Coverage and Responsibility
Condos are getting more popular in our region. Montgomery and Bucks Counties are very popular places to live, and the real estate market for single family homes is competitive. Buying a condo is a great choice for people who are waiting for a house to come on the market, for single or married professionals who want the convenience of maintenance-free living with the security of ownership, and for older adults who are ready to downsize but want the amenities that contribute to an active lifestyle. There are many advantages to this style of home ownership, but it is always important to be a well-informed buyer.
Condo insurance is critical to protecting your interests in a multi-party scenario. What’s even more critical is accepting that most of the other parties are only looking out for their own interests, and this could leave you in a difficult financial situation if you’re not prepared. If you are shopping for a condo, conduct a thorough review of the Condo Association’s Master Policy. If you contact us, our office would be more than happy to review the policy and interpret it. While you most likely won’t be able to get any changes to the policy that work in your favor, youcan go into your sale ready to buy the right Condo Insurance policy for your protection. At SmyrlInsurance, we educate, nurture, and empower our clients through insurance to make sure they are covered in any type of living situation. We carefully consider the what-ifs and explain the homeowners insurance options that will help you manage them. We provide homeowners, renters, condo, umbrella, and many other types of personal insurance for clients in Hatfield, Lansdale, Souderton, Harleysville, and throughout the region in Montgomery County and Bucks County, Pennsylvania.
