Q: Is it necessary to have a homeowners’ insurance policy for a condo if applying for a home equity loan? Unlike an individual house policy, don’t these policies only cover 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 making the loan? — Arthur
A: Yes, hazard insurance bought by condominium unit owners is necessary for many reasons.
The first reason is the “golden rule” — the one with the gold makes the rules. Your lender requires that you have an insurance policy before lending the money to you. You only have to get the policy if you want the loan. Lenders are wise about risk, and when a lender requires a specific precaution to protect their money, a savvy homeowner will want the same protection.
