Condominiums offer many of the benefits of homeownership while shifting some of the time-consuming maintenance to the condo association. Condo ownership is often the “go-to” choice for busy professionals and for older homeowners. Condos don’t require yardwork or maintenance that single-family homes need. They are also a good option for couples or individuals who have decided that caring for a single-family home has become too physically demanding.
Condos come in a variety of sizes and settings, and they offer different amenities and shared resources. Pools, fitness centers, on-site cafes, and 24-hour concierges are just some of the benefits that can come with condo associations.
With so much variety, what is an individual condo owner responsible for insuring?
And how does insuring a condo differ from insuring a home?
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I Just Bought a New Condo! Is Insurance Required?
If you have a mortgage—meaning you borrowed money from a lender—then you’ll almost certainly need insurance. Even if you purchased your condo outright and don’t have a mortgage, insurance is still a very wise idea and often required by the HOA. Condo insurance protects your home and your belongings from unforeseeable events like storm damage or a fire.
What Does Condo Insurance Cover?
Condominium insurance offers coverage that protects you and your belongings. Typical options will include:
- Personal Liability Coverage: protects you if someone is injured while visiting you at your condo and you are found to be at fault. This coverage helps pay for things such as legal expenses or your guest’s medical bills. There’s also an option for someone injured at your condo—even if you are not found to be at fault— called “guest medical coverage.”
- Personal Property Coverage: protects your “stuff,” such as furniture, clothes, pots and pans, etc. Typically, there is a limit on the monetary value that personal property coverage will cover. If you have valuable items like art, electronics, or jewelry, you might need to get additional insurance coverage. You can get a personal property insurance policy or a standalone jewelry insurance policy to protect your belongings.
- Building Property Protection: protects the things in your condominium that are not covered by your personal property protection or the condominium’s master policy.
With so many condominium types, styles, and features, there is a lot of variability in what is covered by a condo’s master policy. These aspects could have an impact on what you need to be covered by your condominium insurance.
What’s The Difference Between Condo Insurance and Homeowners Insurance?
Condominium insurance is different from both homeowners insurance and renters insurance, but it does have some elements in common. Condo insurance protects your possessions and offers liability coverage if someone is injured on your property.
One major difference is how the outside of your condominium is protected. Homeowners insurance includes “dwelling” coverage, which includes the exterior of your home. Renters insurance covers the belongings of the renter, not the property itself. The landlord’s insurance policy covers the exterior of the building.
Condominium insurance covers the exterior and common areas of the building. The cost of the policy is shared by all condominium owners and is paid through the homeowners association (HOA).
If you receive a special assessment from an insurance claim that wasn’t fully paid by your condo association, loss assessment coverage can help.
What Is Loss Assessment Coverage?
Loss assessment coverage is an optional endorsement that you can add onto your homeowners insurance or condo insurance policy. It helps protect you if you live in a shared community, like a condo or homeowners association (HOA), where you’re responsible for a portion of damage or loss in a common area.
Imagine someone is injured in a common area, such as a clubhouse, tennis court, or common stairway. If your condo association is found at fault, its liability coverage will likely pay for the resulting expenses, such as medical bills or legal costs. However, if those expenses exceed the association’s coverage limit, condo unit owners may be required to pay a special assessment to make up the balance owed.
Loss assessment coverage could help prevent you from paying out of pocket in such a situation. It could also help prevent a condo owner from paying out of pocket if their condo association issues a special assessment for expenses.
If an incident damages both your unit and a common area, loss assessment coverage can pay for repairs to both.
If you own a condo, you may also want to look into loss assessment coverage. While this is optional coverage, it can help you avoid having to pay out-of-pocket for special assessments from the HOA. For example, if repairing storm damage to a common area or feature exceeds the coverage limit in the association’s master policy, the HOA may issue a special assessment to condo owners to cover the remaining costs of repairs. Loss assessment coverage can absorb these additional charges.
I Just Bought a New Townhouse! What Type of Insurance Do I Need?
You might need different insurance if you’ve purchased a townhouse rather than a condominium. That’s because when someone purchases a condominium, they own the unit and nothing else. A townhome policy needs to cover the interior and exterior of the home, as well as any structures on the property.
Condominiums and townhomes are similar in that they often have shared interior walls with neighboring homes. Speak with an Expert Agent if you need additional guidance about the right policy for you.
What Types of Insurance Are Available for a Condo?
Your condominium will have an association policy, also sometimes called a “master policy.” This is required insurance that protects areas such as the building’s exterior, common areas, and shared fixtures. For example, if you have a condo in a high-rise, the elevators will be covered under the master policy. Payment for this insurance will come from the HOA fees you agree to pay when you purchase a condo.
Some master policies may cover the interior structure of your condo unit—such as the walls and flooring—and they might even cover interior fixtures such as cabinets and counters. Other master policies will only cover the building up to the walls, so insuring the interior will be your responsibility. It’s important to understand your condominium’s master policy, as it will affect the type and amount of insurance you’ll need.
It’s also important to know what is not covered by condo insurance. As with most homeowners and renters insurance policies, condo insurance usually does not cover flood or earthquake damage to your unit. Coverage for these perils may be available to purchase separately, through a rider.
You can buy umbrella insurance and valuable personal property insurance separately. Whether or not these policies are worth it depends on your personal situation. Umbrella insurance kicks in if a liability claim against your condominium coverage exceeds your standard policy limits.
Valuable personal property insurance protects your belongings if they are lost, damaged, or stolen. It is important to have if you have items of value that would exceed the loss limits in your policy.
What is HO-6 Insurance?
HO-6 insurance is another name for condominium insurance. (The “HO” designation references the different forms of homeowners insurance.)
For example, HO-1 is the designation for very basic homeowners insurance coverage that only covers a limited number of named perils. HO-3 insurance is the classification for the most common type of homeowners insurance, which covers a broad range of perils. HO-4 is commonly known as renters insurance.
HO-6 policies cover people who own a condo or who live in a co-op. These people need insurance that is different from standard renters insurance.
What is ‘Walls In’ Insurance?
If you’ve just bought a condo, you may have come across the phrase “walls in” condo insurance. ‘Walls in’ means that your condo association’s insurance covers some of your condominium. However, you are responsible for insuring everything inside the walls of your condominium.
Condo associations will have their own insurance policy, covered by the fees you pay to your HOA. This insurance will generally cover the common areas, outdoor fixtures, and the exterior of the condo buildings.
Some wall-in policies stipulate that the condo association is responsible for things like wiring and plumbing inside the walls. However, the condo owner is responsible for the interior, including things such as drywall, flooring, and fixtures.
Master policies for the condo association can vary. It’s important to know and understand what the master policy covers when you are deciding on your condo coverage.
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The Bottom Line
Make sure you know what your condo association’s master policy covers before shopping for condo insurance quotes. The policy you choose will directly affect the type and amount of coverage you need to protect your new condominium.
Speak with a Guaranteed Rate Insurance Expert Agent at (866) 947-5397 or start comparing quotes online today!