Condos & Insurance: What Buyers Need to Know

Having homeowner insurance is an important part of homeownership. We are often asked what type of insurance is needed when you purchase a condo or townhome in Mammoth Lakes. Most condos or townhomes have a Homeowners Association (HOA).

The HOA maintains a master insurance policy that covers the common areas and exterior structure of the buildings within the community. This policy ensures that any damages to these areas are covered and that the community remains well-protected. Buyers will receive a copy of this policy with the HOA documents during their inspection period.

It is important to note that the HOA's master insurance policy does not cover the interior of individual units. Owners of a condo or townhome are responsible for obtaining an insurance policy that covers the interior of their home (usually referred to as an HO-6 policy). Most, but not all, complexes require owners to have an HO-6 policy. This typically includes coverage for personal belongings, interior fixtures, appliances, and any improvements or upgrades made to the unit.

An HO-6 insurance policy generally provides coverage for:

1. Interior Structure: This includes walls, ceilings, floors, and any interior fixtures or improvements within the condo unit.

2. Personal Property: Coverage for personal belongings such as furniture, electronics, clothing, and other personal items.

3. Liability Protection: This covers legal and medical expenses if someone is injured while inside your condo or if you are held responsible for damage to someone else's property.

4. Loss of Use: If your condo becomes uninhabitable due to a covered event, this policy helps pay for additional living expenses while repairs are made.

5. Loss Assessment: If the condo association levies a special assessment to cover a loss, this part of the policy can help cover your share of the assessment.

Additionally, if you will be renting out the condo, your property management company will require specific coverage limits (e.g., liability). Some people also choose to include loss of rental income as another add-on to the policy.

Based on my experience with different complexes, many complexes in Mammoth do not include earthquake insurance. In my complex, we vote every three years on whether the owners want earthquake coverage or not. If the vote is yes, depending on HOA finances, there could be a special assessment. Again, the HOA earthquake policy would only cover the exterior; you would still be responsible for the interior.

Finally, the biggest challenge in California is fire insurance. Personally, I would make sure fire insurance is included. Since most carriers are no longer writing fire policies in California, you may have to get a separate policy called the California Fair Plan from the state of California.

When reviewing the different options, the quotes can be confusing. Make sure you are comparing apples to apples when looking at the rates.

I'm not an insurance expert, and quite honestly, the policies are quite confusing. Your insurance agent should be able to help you make sense of the quotes.