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CONDOMINIUM INSURANCE

Protect Your Condominium With The Best Insurance Options In Oklahoma.

 

CONDOMINIUM INSURANCE | CONDO INSURANCE

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Oklahoma Condo Insurance: Coverage Details and HO3 vs. HO6

Oklahoma condo insurance is fundamental for people who are considering condominium ownership as an alternative to traditional homeownership. Condominiums make for great second homes and they are also popular among young people who want to make their first real estate investment and the folks who want home ownership without the hassles of dealing with a lot of the headaches associated with owning a stand alone single-family dwelling.

Either way, you will need insurance and it’s a good idea to know everything about condo home insurance to understand what this kind of policy has to offer. One of the very first things you need to understand is that when you purchase a condominium or a townhouse, you are normally joining a condominium HOA or townhouse HOA, which will take care of the outer building and grounds maintenance, and sometimes they will also handle security, unit sales, and new member applications.

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What is a Condominium

Before delving further into the coverages of condominium insurance in Oklahoma for starters, it’s important to cover the basics. A condo is a privately-owned unit that’s part of a building or community of buildings where there are other units. Owners share common areas such as garages, elevators, pools, gyms, etc. A condo can be a primary residence, a secondary or vacation property, or a rental property if you decide to rent your condo to others whether long-term (12-month minimum) or short-term (such as VRBO or Airbnb).

Condo insurance may also cover townhouses, which are multi-floor homes that share walls with adjacent properties yet they have their own individual entrance and there aren’t units either below or above them. Think of townhouses as a mix between a condominium and a house. There are insurance companies in OKC that insure condominiums and provide the coverage you need no matter which of these two properties (condo or townhome) you decide to purchase.

Assessing Condominium Coverage Needs.

When you own a condo or a townhome, it’s different from renting and it’s also nothing like owning a house. For one, condominiums require less maintenance and there’s also less to insure than there would be if you owned a house. You only have to insure the interior walls-in of your unit (aka walls in condo insurance) and your personal belongings OR, in some circumstances the unit owner is responsible to insure ONLY improvements to your condominium unit (aka condo policy betterments and improvements coverage) and your personal property which should be your main priority if you own a condo or if you’re thinking of purchasing one.

The condominium or townhouse association is responsible for insuring the common areas and the grounds, but typically, you have responsibilities, including personal property coverage, liability coverage and walls in coverage. The association will determine your insurance responsibilities in the Master Deed or Bylaws, so you need to make sure exactly what you’re expected to cover on your own.

How Much Personal Property Coverage Do You Need?

The amount of personal property coverage you need will depend on the value of your personal property as a whole. This is why you should take inventory and there are plenty of resources to help you with that. Once you know exactly what you own and you’ve determined the value of your entire personal property, you have to ask yourself this question: How much can I stand to lose?

For example, some people are okay with the basic dwelling policies and the coverage they provide, which may not include theft coverage. But if you need to cover against theft or attempted theft on account of malicious mischief or vandalism, you might possibly need to add a coverage endorsement to the dwelling policy if it doesn’t already include that peril provision.

It’s also important to note that any personal property that’s used for business purposes will not be considered personal property, so it won’t be covered under personal property coverage. Another thing to keep in mind is that only the personal property that belongs to you is covered, that doesn’t include any personal property you’re keeping for a friend or family member who is not a resident.

In other words, anyone who is not listed on your policy won’t be able to enjoy personal property coverage, which includes roommates and employees. If you want to cover their personal belongings while they’re on your property, you need to list them on your policy, which may cost you in extra premium.

When You're the Landlord of a Condo Unit.

If you are renting out your condominium, you are exposed to financial loss, which means that you search for suitable condo rental insurance that will cover your legitimate concerns. Fortunately, you don’t have to get commercial landlord coverage to be safe. All you have to do is combine dwelling insurance and broad theft coverage to meet your needs, an HO6 policy for landlords.

Protection against tenant theft is something you can’t neglect, even if you don’t think your renters will do that sort of thing. If they do, your dwelling policy form won’t cover that, so you need the extra protection. It’s also possible for renters to forget to lock the doors or windows, and they may be victims of burglary. In that case, if some or all of the property stolen was yours as per the lease agreement (such as appliances and furniture), your insurer may refuse to pay because their standard coverage is based on the assumption that you’re partly responsible for keeping the property and its contents safe.

Before you rent your property to anyone, you need to read your insurance policy carefully and look at the exclusions. If you find something along the lines of “peril or theft doesn’t include any part of loss when the property is rented by the insured to another party”, you should ask your agent if there is an endorsement for that specific peril or search for another condo landlord insurance policy which includes that type of loss or offers an endorsement to cover it.

If you’re renting your condo full-time on a short-term basis (such as VRBO or Airbnb) or you plan on doing this long-term (12+ months lease agreement), or if this is your primary or vacation residence and you rent it out every once in a while, you should discuss that with the agent who is working on your HO6 insurance quote because a lot of insurance companies will not insure rental properties that are rented on a daily, weekly or monthly basis and you can find yourself with a denied claim and a non-renewed policy. If you rent out your property randomly, it is possible that your condo homeowners insurance has an endorsement specifically for those random rentals for an additional premium on your policy, but don’t assume that the policy has that endorsement. You’ll need to ask your insurance agent about it, and if there isn’t an endorsement you will have no coverage for any kind of peril caused by the occupants renting your home.

Things You Should Know

Two Types of Insurance Required By Condo Associations

It is VITAL to distinguish between the (2) types of insurance the condominium association provides based on the Master Deed or Bylaws:

Type 1

You have the "Interior Unit" option, which is used when the master agreement determines that the owner of the unit is responsible for insuring the property and fixtures from the unit's barewalls inward. This is the majority of condominium agreements.

Type 2

You have the "Upgrades Only" option, which is used when the master agreement determines that the association will insure the unit in the state in which the unit was built or purchased. THis means the owner will only be responsible for insuring the upgrades made to the unit. This condominium agreement isn't used very often.

Slide Note: Insurance companies that offer HO6 insurance may or may not offer both of these condominium inurance types. it is very important that you inform the insurance provider which type if coverage you need so that they can determine if they offer that insurance. If that insurance company doesn't offer the type you need, then you will need to find an insurer that does. It is encouraged that the insured makes a statement based upon the conversation in which the insurer is providing the coverage that you desired AND is required by the condominium HOA, AND have them sign & date it for your records.

HO3 Policy: Coverage Details

Before going into the HO3 vs HO6 differences, it would be helpful to discuss each policy individually and provide all the details you need to know. First, is the HO3 policy form, also known as homeowners insurance. This kind of insurance will cover the structure of a single-family home (built on-site), personal belongings and also provide liability coverage. The HO3 policy will also include protection for other structures and it will cover additional living expenses if you ever need to live somewhere else while your house is being repaired after a covered peril.

Coverage A:
Dwelling

This will cover the residential premises, including attached structures such as a garage. However, Coverage A excludes the land on which the residence is located. (Homeowners and Dwelling policies do not insure land)

Coverage B:
Other Structures

This will cover additional structures, such as swimming pools, fences, etc. However, Coverage B excludes any kind of structure used for business purposes and buildings rented to anyone other than a tenant of the residence.

Coverage C:
Personal Property

This will cover the personal property of the insured wherever it’s located. It also may cover the personal property of guests, employees, and others while it’s on the residence. Additionally, it covers personal property located in secondary properties, also known as vacation homes. However, Coverage C excludes pets, renters, tenants who are unrelated to the insured, business data, credit cards, items that are insured separately, aircraft, and motor vehicles as well as the accessories and equipment attached to those vehicles.

Coverage D:
Loss of Use

This will cover your needs when you can’t use your residence as a result of a covered loss. The coverage period is limited to the shortest amount of time necessary to repair or replace your residence.

Coverage E:
Personal Liability

This will cover the expenses of bodily injury or property damage if you’re found liable. Of course, this relates to incidents that occur in your property for which you can be liable. If you’re sued, it is possible that your insurer may help you in a lawsuit related to alleged negligence of personal actions, proclamations, property maintenance and aggressive assault behavior by your pet(s).

Coverage F:
Medical Payments to Others

Last but not least, this will cover reasonable medical expenses, which often has a monetary limit. Your insurer will cover medical expenses 3 years from the date of the accident. If someone is injured in the premises or if they are injured off the premises but the cause is directly linked to the premises or the insured, you may have to cover the person’s medical expenses. However, the medical payments in Coverage F doesn’t apply to the insured or their regular residents.

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HO6 Insurance Policy Explanation

Now it’s time to discuss the HO6 policy form, which is a homeowners insurance policy that’s specifically for condo and co-op owners. It’s known as “walls in insurance” because it covers the interior of the condominium unit as well as any personal property you may have outside of the unit. The exterior of the condo, meaning the common areas, laws, and outer areas, are insured by the condominium homeowners association insurance provider.

Condo owners only own a unit, which is a portion of the building. That means individual owners share the ownership of the building, so any disputes over shared liability can lead to legal judgments against individual owners.

For instance, let’s say a neighbor started a fire that damaged your unit. Their insurer might not pay for your damage because they could claim your insurer should pay. That would lead to the courtroom. To avoid these situations, condo owners purchase the HO6 so they can cover their bases.

However, there are still some issues to address. One of the most common ones being that condominium insurance policies don’t include coverage for broad water damage, which refers to issues like sewer back-up and more, but there might be an endorsement available for specific coverages like that.

Wind-driven rain issues are common in high-rise buildings and not all associations have coverage for this specific issue. Say you purchase a condo on the 7th floor as your second home and when you go use it, your furniture is covered with mildew. If they don’t have coverage for that, you won’t be insured and you’ll have to solve this out of pocket.

All this to say that an HO6 policy is not a luxury, it’s a necessity. A number of condo owners think that the insurance provided by the condominium association is enough. However, you have to remember that it only covers the exterior and the common areas. Your unit is your responsibility, so you need additional coverage to make sure your investment is protected.

So, if you’re browsing for condos for sale in Broken Arrow OK or condos for sale in Tulsa OK, or someplace more specific like Central Park Condominiums in Tulsa OK, you’ll also need to get condo insurance in Tulsa by your closing date. The HO6 provides almost the same kind of coverage as the HO3, including Coverage A, Coverage C, Coverage D, Coverage E, and Coverage F. Refer back to the section above to see what each coverage provides.

*Note, although the condominium association has coverage for the outer structures of the buildings and liability coverage, it is possible that it might not be enough coverage after a claim. What happens is that once the insurer has fulfilled its policy obligation and there is still a need for more money to adequately make repairs or re-build, the condo HOA will then determine the total costs and distribute that evenly among all of the condo unit owners. The HO-6 policy does include “Home Association” coverage for these type of situations, offering different coverage amounts.

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Condo Insurance vs Homeowners Insurance

Before we get into the in-depth comparison, here’s a table for a closer look. Just remember, not all condo insurance policies are the same as they differ from insurer to insurer. Read the policy carefully and evaluate your needs realistically to make sure you’re getting the coverage you need.

Type of Coverage
HO-3 Policy
HO-6 Policy
Coverage A : Dwelling
Declared value
Declared value
Coverage B : Other Structures
10% of Coverage A
Part of Coverage A
Coverage C : Personal Property
50% of Coverage A
$6,000 minimum
Coverage D : Loss of Use
20% of Coverage A
40% of Coverage C
Coverage E : Personal Liability
$100,000 minimum
$100,000 minimum
Coverage F : Medical Payments
$1,000 minimum
$1,000 minimum

The biggest difference between these two policies is they serve different purposes. The needs of a homeowner are not completely the same as the needs of a condominium owner, which is why they require different policies. Condos require less maintenance and there’s less to insure as compared to houses.

With a condominium insurance policy (HO-6), you are covering only what you own, which is the unit and your personal property, not to mention you’re covering yourself. The condo association will take care of everything else because they own the building, the structure, the common areas, and the exterior.

With a homeowners insurance policy (HO-3), you’re covering the entire home, the other structures on the premises, personal property, and yourself, so there’s a lot more to it because you own everything. Both policies provide peace of mind and they help protect your investment, it’s just that the properties are different and that means your needs are different.

The HO3 policy covers a lot more than the HO6 policy because there’s a lot more to cover. For example, the fence around a home would be covered by an HO3 policy. If it gets ruined during a storm, the insurance will cover it. However, if you live in a condo and the fence around it gets damaged, that’s on the condominium association, and their insurer should cover it, not yours.

This is why condo owners need to read the master policy of the HOA and understand exactly what kind of coverage they have in place. This will not only let you know what the condo association is responsible for, but it will also help you determine what kind of coverage you need to make sure you’re safe. Having the right amount of dwelling coverage is a rule of thumb for condo insurance and homeowners insurance, so that’s something you simply can’t neglect.

Whether you own a house or a condo, you need liability coverage. It’s true that if someone gets injured in a common area of the condo, your association’s insurance company will look into that claim. However, accidents can happen inside the unit as well and you would be liable, so you need personal coverage. The same goes for homeowners; you can never predict accidents, so you have to be prepared for anything.

You also should have an inventory of your personal property to understand the coverage limits and make sure you’re getting the right amount of coverage. Both the HO3 and HO6 policies provide this type of coverage, you only have to make sure it’s appropriate for your needs.

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As you can see, the difference between an HO3 policy and an HO6 policy is how much you need to protect. When you’re a homeowner, you are responsible for the entire property, both the exterior and the interior. But when you own a condo, you’re only responsible for yourself, your unit, and your personal belongings. Both of these policies offer similar coverage to a certain degree.

However, there are still differences. For example, dwelling coverage for condominiums only has to cover the repair or rebuild of the interior of your unit, walls insurance. Any of the outside repairs will be covered by the condominium association’s insurance. Liability coverage is also different.

For condo owners, it covers the related legal and medical expenses if you’re found liable for an accident in your unit or if you accidentally damage someone else’s property. Homeowners need dwelling and liability coverage for their entire property. It’s clear that both policies provide the same kind of coverage, the difference is that the condo owners have a lot less to insure than homeowners so the limits are not the same.

Whether you’re looking for condos for sale in Norman OK, are browsing condominiums in Edmond OK, or are searching for condos for sale in Jenks OK, condo insurance in Oklahoma is fundamental for protecting your home and getting a condo insurance quote may not be as easy as obtaining an insurance quote for a house. Fortunately, there are a few good insurance companies that provide exactly what you need. Just make sure you read the condominium HOA’s Master Deed or Bylaws so you understand exactly the kind of coverage you should have.

Oklahoma condo insurance fills that all-important “missing piece” of coverage that your condominium homeowners association policy doesn’t cover. If you’re looking to become a condo owner in Oklahoma, there are more and more options and places to purchase them, from luxury condos in Tulsa OK to condos for sale in Monkey Island OK, your choices can seem unlimited. Keep in mind that with these options it needs to be matched with the appropriate HO-6 condominium policy. So, wherever you decide to purchase your condo, make sure you get the correct coverage type, either condo upgrades only or condo interior unit with the proper HO6 insurance.

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