Condominiums

Problems with owning a condominium can arise in insuring your property. Because you own only your unit, many insurers are only willing to provide coverage that addresses incidents occuring within your unit, such as burglary or a kitchen fire. 

However, some insurers might want to insure the entire building, not just your unit -- for example, if a flood damages the foundation and makes the building uninhabitable. Although your insurance policy covers your unit, it does not cover the building. In this instance, the condo association will need to have purchased insurance that covers the entire building.

When considering a condominium, see if the association carries enough insurance to cover major calamities. See Chapter 20: Insurance for more information on insurance issues for condominiums. Also, investigate insurance packages that will protect you should the condominium corporation become short on funds. You might face increased assessments for property damages and liability losses that occur on the property, which are uninsured or underinsured by the corporation.

For example, if the common areas sustain damage, the master deed might stipulate the condominium owners (i.e. you) are personally liable to pay the remaining balance for any repairs that the insurance does not cover. Find an insurance package specific to condominiums that offers increased liability protection. Again, see Chapter 20: Insurance for more information.