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Your personal possessions are not covered by your association fees, nor is any personal liability protection. Usually, your monthly condo fees are only used for a building insurance policy. To protect yourself and your belongings, you should purchase a personal home insurance policy that covers condos and co-op apartments. This type of policy is called HO-6.

You should first review your association's insurance policy to find out what it covers. Typically, it'll cover common areas like hallways, the roof, basement, elevators, boiler, and common walkways, for both physical damage and liability. Many associations also have coverage for sewer backups, seepage, floods, and earthquakes.

The general HO-6 policy covers 17 perils:

  • Fire or lightning
  • Windstorm or hail
  • Explosion
  • Riot or civil commotion
  • Aircraft
  • Vehicles
  • Smoke
  • Vandalism or malicious mischief
  • Theft
  • Damage by glass or safety glazing material that is part of a building
  • Volcanic eruption
  • Falling objects
  • Weight of ice, snow, or sleet
  • Water-related damage from home utilities or appliances
  • Electrical surges

You should ensure that your policy provides liability protection in case anyone is injured while in your unit. Also, if a covered peril occurs and your condo or co-op becomes uninhabitable, your policy should include coverage for the additional living expenses you incur while living elsewhere. This is usually 30 to 40 percent of the value of your policy. So, if your policy has a $100,000 value, your additional living expense limit would be $30,000 to $40,000, depending on the policy.

Replacement Cost vs. Actual Cash Value

Before buying home insurance, you should understand the difference between the replacement cost and actual cash value. Most homeowner policies have replacement cost coverage on the structure itself and actual cash value coverage on personal property.

The replacement cost of an item is the amount you would expect to pay to replace it with an identical or similar item. The actual cash value of an item is the replacement cost minus depreciation.

A policy that uses replacement cost gives you more protection than one using actual cash value coverage. Insurance companies will generally require proof that you're replaced an item before reimbursing you, or they will offer to replace the items themselves.

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