Buying A Condo? What You Need To Know About Insurance
While there are some differences in buying an Austin, TX condo versus a single-family home, insurance coverage is pretty similar. Once you find a condo that fits your needs, you’ll likely start looking into how much insurance coverage you need, what the condominium association covers, and what items you should include on your policy.
Normally, the condominium associations own and insure the outside structure of the building – condominium grounds, pools, tennis courts – and the condo owner will cover everything inside the four walls of the unit.
How Much Condo Insurance Do I Need?
The insurance term that refers to the condo unit’s interior finishes is Additions and Alterations or A&A. This is comparable to a homeowner’s insurance policy that covers the cost to rebuild a house. A&A covers structural finishes and features, but not personal belongings or furniture inside the unit.
When calculating the amount of coverage you’ll need, consider anything that’s attached to a wall or floor, which would include the cost of wall coverings, like paint, floor coverings, interior doors, built-in cabinetry, appliances, plumbing, and electrical features.
Remember to ask what the condo association covers with its insurance. Some associations will cover the exterior and structural interior portions of the building, so before you decide on a policy, have a clear understanding of which condo parts you’re responsible for.
When Condo Common Areas Are Damaged
When deciding on which new, trendy Austin condo best fits your needs, ask for a copy of the master condo policy. This document will not only give you an idea of how much you are responsible to replace inside your unit, but you’ll also get access to your loss assessment obligations. That is, if a fire or major storm damages a portion of the condominium building’s common areas, each condo owner will be charged a fee to cover the cost of repairs. Certain condo insurance policies offer financial help in covering some of the assessment obligation costs you have to pay.
Cash-Value Or Replacement-Cost Coverage?
Once you decide how much insurance coverage for your Austin condo is needed, you’ll choose cash value or replacement cost coverage. The most important difference between the two is that cash-value coverage only replaces the value of the insured item less depreciation. The second option, replacement-cost coverage, will be compensated for the value to replace the insured item with a new version. Depreciation isn’t considered in the placement-cost model.
Condo insurance is mainly built off of your assets. The biggest coverage cost will derive from the value of your belongings. Doing your homework and understanding what the condo association covers will help you make the best decision when buying condo insurance in Austin.