If you own a condo in Long Beach, you have probably been told the HOA "has insurance." That is true, and it is also the reason the question comes up. Whether you need your own policy depends on what the association's policy covers, what your lender requires, and what you would pay out of pocket after a loss. This post explains how the pieces fit.
The short answer
California law does not require a condo owner to buy an individual policy. In practice, most owners need one. Your mortgage lender will almost always ask for proof of coverage, and the association's governing documents often require owners to carry a policy of their own. Even where no one requires it, the HOA's master policy leaves gaps that fall on you.
What the master policy covers, and what it does not
The association's policy insures the common areas and, depending on the documents, some or all of the building structure. It usually does not cover your belongings, your liability if a guest is hurt in your unit, or upgrades you made inside. Whether the master policy insures the unit only to the bare walls or includes the fixtures and finishes is set by your CC&Rs, which is why that document is the first one to read. Owners in Naples, downtown and along the shoreline can end up on different sides of that line even in the same price range.
What California requires the HOA to tell you
California law gives condo owners two protections worth knowing. The HOA has to send owners a summary of its insurance policies every year. That summary is the fastest way to see what the master policy does and does not cover. The HOA must also notify owners if a policy lapses, is cancelled, or is significantly reduced. That notice comes after the change, so it cannot be your only safeguard.
The four parts of a condo policy
A condo policy, called HO-6, generally has four parts: coverage for the interior of your unit, such as fixtures, flooring, cabinets and improvements; coverage for your personal property; personal liability; and loss assessment. Loss assessment is the part most owners have never heard of. If a large claim exceeds the master policy or its deductible, the association can bill owners for a share, and this coverage can help pay that bill. The limit is often modest unless it is raised, so ask what yours is. Earthquake damage is excluded from a standard condo policy and is sold separately.
A quick example
Suppose a burst pipe in the unit above yours damages your kitchen, floors and furniture. The master policy may pay for the building's plumbing and shared walls, but your cabinets, flooring upgrades and every piece of furniture may be yours to claim under your own policy, and the neighbor's liability coverage may or may not respond. That is the moment the individual policy earns its keep.
How to decide
Gather three things: the master policy declarations page, the insurance section of the CC&Rs (your HOA's governing documents), and your lender's insurance requirements. Then ask three questions. What does the master policy cover inside my unit? What is the master policy deductible, and how would a claim be assessed to owners? What would I owe if I lost everything I own tomorrow? If you cannot answer the last one, you need a policy.
Talk to a local agent
Cacheo Insurance Agency, a Farmers Insurance agency in Long Beach since 2008, will read the documents with you. Learn more about condo insurance in Long Beach, or, if you own a townhome or a house instead, see home insurance in Long Beach. Call (310) 734-6151 or stop by 4510 E Pacific Coast Hwy Ste 450.
Sources: California Civil Code sections 5300 and 5810 (HOA insurance summary and notice rules). Coverage descriptions are general and depend on the policy issued.