Condominium and town home owners: Are you protected?

(Aug. 2012) — Most people don't think twice about purchasing adequate insurance protection for their auto or home. But many who purchase condos or town homes mistakenly neglect to insure the interior of their properties, often assuming association insurance policies will cover replacement costs.

Unfortunately, most association policies cover the exterior structure only, not what is contained within an individual unit. It’s comparable to having a car accident where a repair shop fixes only the exterior, leaving the interior untouched, requiring additional funds to replace the seats, steering wheel, etc.

Condominium and town home owners may find themselves in a similar situation without adequate insurance. If a fire, flood or other insurable event occurs, more than likely there would not be sufficient coverage to replace carpeting, cabinets, drywall, fixtures and doors, just to name a few.

To address this gap in coverage, some lenders now require owners to carry a specific condominium or town home policy. Fortunately, this coverage can often be obtained at a minimal cost per month. It's important to have a discussion with an insurance professional to determine what is covered by an association's policy and what additional insurance is needed by an individual owner to protect their assets. Associations may not be familiar with the intricacies of insurance and association agreements and by-laws can vary widely.

Some issues for discussion:

  • What amount of coverage does my association policy provide?

  • If the association provides coverage for the interior, how much? Has the interior of the property been upgraded since the original owner purchased the property (such as new appliances or countertops)? Does the insurance cover the original building elements only?

  • What amount of coverage do I need to insure the interior of my property … not just my personal belongings, but fixtures, carpeting, cabinets, etc.?

  • How does the deductible I choose for this policy affect my premiums?

  • Will this policy cover injury on property due to negligence (liability coverage), and what amount of liability coverage is appropriate?

Be sure to protect your investment by consulting an insurance professional who can assist you with the nuances of condominium and town home insurance.

Based in Madison, Wis., American Family Insurance offers auto insurance, homeowners insurance, life insurance, health insurance, business and farm/ranch insurance in 19 states. American Family insurance is the nation's third-largest mutual property/casualty insurance company. Web:; Facebook:; Twitter: