Regarding insurance on condos and townhomes

[ 0 ] June 16, 2016 |

townhome

Most buyers are aware that, when buying a condo or townhome, a monthly HOA fee comes along with the purchase. And, most buyers are also aware that “insurance” is included in this fee. This is great, because it means that you no longer have to worry about insurance on your new investment…right? Well, yes and no. Yes, it is almost always the case that included in the HOA fee is a hazard insurance policy on your condo/townhome; so yes, you do have insurance. However, this policy very often DOES NOT cover any damage to the inside of your home; that is, these policies generally cover you from the “studs out.” It’s very likely nothing inside your home is covered. So, imagine a kitchen grease fire gets out of control and causes serious damage to your kitchen and living room. Well, most insurance policies included in your HOA fee would not cover this damage.

Buyers often believe their lender will tell them if additional coverage is needed. Unfortunately this scenario is, in my experience, the exception rather than the rule. It makes sense the lender would be on top of this, but for some reason, it is just not generally the case.

So, the bottom line is this: When buying a property where insurance is included in the HOA fee, be sure to secure a copy of the policy, and pass it along to your own agent. Experienced insurance agents will be able to guide you in the right direction, warn you if additional insurance is needed, and if so, will inform you on what kind of additional coverage may be necessary.

Category: Real Estate

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