Generally a condo association master policy covers the building exteriors and common areas of the complex, but it doesn't cover the inside of your unit. In some cases, it may not even cover everything outside.
Your first step is to check what the association's policy covers. This isn't going to be easy reading – some association policies can be dozens of pages of legalese – but it's essential to understand where your responsibility begins.
For example, some condo association policies cover the exterior walls from the paint inside your unit outward. Others cover the exterior from the middle of the walls outward. Get a copy of the document and ask a trusted insurance agent for help in interpreting the coverage.
Next you must decide how much home insurance coverage is necessary to protect your belongings and interior features, such as wood floors, kitchen cabinets and fixtures.
Understand the difference between actual cash value and replacement cost coverage. Actual cash value coverage takes depreciation into account and pays the current market value of an item that's destroyed. Replacement cost coverage pays for the cost to buy a brand new, comparable item.
So, for instance, if a fire destroys a 4-year-old television, actual cash value coverage would reimburse you for the value of a comparable TV, minus four years of depreciation. Replacement cost coverage would pay the full cost for a new comparable TV. (Don't forget, though, that in either instance you must pay the policy's deductible before collecting any money from the insurance company.)
Replacement cost coverage is more expensive than actual cash value coverage, but you'll be glad you paid the extra price if you suffer a major loss in a catastrophe.
Keep in mind standard homeowners insurance has limits on certain valuables, such as fine art, antiques, jewelry and electronics. So, you might need to purchase an endorsement or "floater" to provide additional coverage for these items.
Standard home insurance also includes liability coverage, which protects you financially if a visitor is injured at your condo.
Meanwhile, insurance brokers often recommend buying loss-assessment coverage. If a disaster damages the common areas – imagine a hailstorm pummeling the roof – the condo association can ask the owners to pay their share for repairs. Loss-assessment coverage would pay your portion in this instance.
For more, see "Condo insurance: How much is enough?"
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