What is condo insurance and why do you need it?

If you own a condo/townhome or are thinking of buying one, you should understand your insurance coverage. Your homeowner's association will have insurance that covers your unit. But you still need your own insurance.

The condominium association insurance covers the condominium building, commonly owned property (covered parking spaces, fencing) and liability insurance for the association.

But that insurance doesn't cover losses to your unit as a result of a burglary, if water damage ruins your living room walls, or if someone slips on your wet kitchen floor and is injured. That's why you need condominium insurance designed specifically for condo or co-op owners.

Condominium policies protect you from losses to your personal property and the interior of your unit. You will also have liability protection for bodily injury or property damage to others. The articles of the condominium association and state law determine exactly which building components are covered under the association's master insurance policy. Generally, the association's coverage stops at the exterior walls meaning that you are responsible for the interior walls and possibly for fixtures, as well as your personal property and liability exposures.