Do I need individual condo insurance to get a home equity loan? |

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Q: Is it necessary to have a home insurance policy for a condo if you are applying for a home equity loan? Unlike a single-family home policy, don’t these policies cover only the owner’s personal property — what is “between the walls”? The general policy held by the HOA covers the building itself. Shouldn’t that be enough for the entity granting the loan? —Arthur

A: Yes, hazard insurance purchased by condo owners is necessary for many reasons.

The first reason is the “golden rule” – whoever has the gold makes the rules. Your lender requires you to have an insurance policy before lending you money. You only have to get the policy if you want the loan. Lenders are wise when it comes to risk, and when a lender demands extra care to protect their money, a savvy homeowner will want the same protection.

Individual condominium risk insurance covers more than just your belongings. Although policies may vary, your policy will most likely cover damage to your flooring, appliances, cabinets, and drywall.

In the event of a water heater fire or burst, you will need to replace much more than your clothes and sofas. If the damage is severe enough, your insurance may cover alternate accommodation while repairs are made.

If you are the cause of the accident, the insurance can cover your liability towards your neighbours. You may get along with your neighbors, but they will sue you if they believe your negligence caused damage to their home.

If a neighbor or guest slips while visiting your unit, your policy should save you from having to cover their medical care out of pocket.

I strongly recommend anyone who lives in a condominium to have an individual policy, even if the association has insurance covering the building itself.

(Gary M. Singer is a Florida attorney and board certified as an expert in real estate law by the Florida Bar. He practices real estate, business litigation and contract law from his office in Sunrise, Florida. Florida. He is the president of the Real Estate Section of the Broward County Bar Association and is a co-host of the weekly radio show Legal News and Review. He consults frequently on general real estate issues and trends in Florida with various businesses in across the country. Send him questions online at www.sunsentinel.com/askpro or follow him on Twitter @GarySingerLaw.)

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