Insurance: what’s covered

One of the questions I get often from clients is about insurance. Most people believe that since they are moving into an HOA community which already has insurance they don’t need to buy their own.

In order to understand that better we need to break HOA into at least two categories – Single Family Houses controlled by HOA and common residences HOA. The first are just a like any house and your bank will require you to have insurance. The second category is about Condominium associations and townhouses.

It is true that your association has a policy which will cover the building in case of a disaster. The key here is that it will cover the building. This policy will cover all the needed repairs and construction to return the building to the same state as it was before the damage occurred. It WILL NOT cover your personal items such as clothes, furniture, electronics, etc. For that you need to have your own policy.

You, also, need to understand what policy your association carries. Many HOA to save money buy only what’s called a “Bare Walls” policy. This policy will not cover any improvements inside your unit. This would include flooring, kitchen, bathrooms, etc. Think of it this way. If your unit was completely destroyed after reconstruction you’ll get it back with only unpainted drywall. Everything else is up to you to rebuild.

Think hard before you decide not to buy your own insurance policy even when living in a condominium which has its own policy.

About Jeff Ross

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