Renting or in a condo? Where the building's policy stops and yours starts

If you rent, or if you own a condominium, somebody else is insuring the building. That fact is true and it is the reason a great many people carry no insurance of their own at all. The reasoning does not survive contact with the documents.

Renting: the furniture is the small half

Tenants tend to evaluate renters insurance by adding up their belongings, concluding that a sofa and a television do not justify a monthly payment, and moving on. That is a fair calculation about the wrong part of the policy.

The larger half is personal liability. It follows you rather than the apartment, and it responds when you are held responsible for injuring someone or damaging their property, including the building itself. A cooking fire that starts in your kitchen and takes out three units is not a furniture sized number, and your landlord's insurer will look to recover it from you.

The other quiet half is loss of use, which pays for somewhere to live while the building is repaired. If a fire starts two doors down and has nothing whatever to do with you, your landlord's policy repairs the building and owes you nothing for the four months you cannot live in it.

Condos: the boundary is in the association documents

A condominium association carries a master policy on the building, and the question that decides your own policy is a simple one with a variable answer: how far into your unit does that master policy reach?

Some associations insure the unit back to the bare studs, which leaves you responsible for the drywall inward. Cabinets, flooring, fixtures, appliances, and whatever the previous owner installed. Others insure the unit as originally built, so the original finishes are covered and your upgrades are not. A few reach further still.

These are genuinely different situations, and the only way to know which one you are in is for somebody to read the association's declaration and master policy summary. A unit owner policy written without doing that is a guess about the single most important line in it.

The loss assessment clause nobody reads

There is one more condo specific item worth naming. When the association suffers a loss larger than its master policy covers, or has to pay a large deductible, it can assess the owners for the shortfall. That bill arrives at every unit, whether or not anything happened inside yours.

Unit owner policies can carry loss assessment coverage for exactly this, often at a limit that has not been revisited in years while association deductibles have climbed. It is a cheap thing to increase and an unpleasant thing to discover at the wrong end.

And from the other side: letting a property out

If you own a property you rent to somebody else, a homeowners policy is not the right form and carriers are firm about it. A landlord policy covers the building and your liability as its owner, and can cover the rent you lose while the property is uninhabitable after a claim. It does not cover your tenant's belongings, which is precisely why a sensible lease requires the tenant to carry renters cover of their own.

What to have ready

• Renting: a rough value for your belongings, and a view on how much liability cover you want behind you.
• Condo: the association declaration and the master policy summary, which the management company can send you.
• Both: whether anything you own is valuable enough to schedule separately, since standard policies cap jewellery and similar items well below what one good piece is worth.
• Landlords: the lease, and whether it already requires the tenant to insure themselves.

Full Circle Insurance writes renters, condo and landlord policies across Allegheny County and Western Pennsylvania, and as an independent agency it can place them with any of eight carriers. Call (724) 935-8000, Monday to Friday.