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

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.

Individual condo owner hazard insurance covers more than just your belongings. While policies can vary, your policy will most likely cover damage to your flooring, appliances, cabinets and drywall.

Should there be a fire or burst water heater, you will have to replace much more than just your clothes and couches. If the damage is bad enough, your insurance may cover alternate housing while the repairs are made.

If you cause the casualty, the insurance may cover your liability to your neighbors. You may get along with your neighbors, but they will sue you if they believe your carelessness caused their home to be damaged.

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

I strongly recommend that anyone who lives in a condo 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, Fla. He is the chairman 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 frequently consults on general real estate matters and trends in Florida with various companies across the nation. Send him questions online at www.sunsentinel.com/askpro or follow him on Twitter @GarySingerLaw.