When you move into a new condo you will automatically become a part of that homeowners association, or HOA. As part of living in that unit, you will need to pay a certain fee every year for the general maintenance of the building and complex area. In addition to routine maintenance, security systems, utility services, general upkeep of shared facilities, parking lot and street lighting and landscaping, most HOA fees will also include condo insurance. However, every policy is different so you need to review your HOA fees each year to see what you are actually paying for.

HOA Insurance Inclusions

An HOA is put into place to regulate the rent to own condo complex. It is meant to make life a lot easier for all tenants and condo owners but often it comes with incredibly high fees and conflict of interest concerns. An HOA will make certain rules about tenant ownership and renting, painting the exterior of your home, having visitors to the complex and even restricting the number of people that occupy your condo. Although you do own the condo, you are part of a larger complex and thus must adhere to the rules and regulations, as well as the fees determined by your HOA.

Some people pay over $5000 per year for their HOA fees. This depends on where you live and how many people are in the complex. It also depends on what is included in your HOA policy. Most HOA policies will include general insurance which consists of structural coverage as well as liability protection. However, review your policy to determine what is actually covered and what you are paying for each year.

The insurance that is included on your HOA fees is referred to as a 'master' policy. This is mandatory coverage that you will need to pay for and usually includes protection against the general structure of the building such as the roof and basement as well as the shared facilities such as the swimming pool and parking lot. Every condo association has a different master policy which is why you need to review it to see what is actually included.

Buying Individual Condo Insurance

While some insurance may be covered through your annual HOA fees, you still need to purchase your own individual condo insurance for the contents inside your home. Condo insurance is known as H06 policy of homeowners insurance and offers protection against 16 listed perils. It provides compensation in the event of damage to your personal belongings, liability protection, loss of use coverage and structural coverage.

For new condo owners understanding how condo insurance works can be a little confusing. After all, rather than having one homeowners insurance policy, you will have two - your individual coverage and your HOA master policy. Even if your master policy appears to be comprehensive, no master policies will offer contents protection which is why all condo owners should purchase their own individual coverage on top of the master policy. Compare your options and speak to a representative that specializes in insuring condo owners. That way you know what you need and can purchase adequate coverage without the confusion.

The main thing to look over when buying your individual policy is what structural coverage is protected on your master policy and what is not. Are your cabinets protected? What about your walls? What about the plumbing and pipes? Some HOA fees cover insurance policies; others will not. It is your job to determine what you are protected for and then fill in the missing pieces with your own individual policy.

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