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Condominium Insurance Coverage: Your Definitive Guide

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Charlotte Edwards

By: Charlotte Edwards

Edited by John Leach

Last Updated August 9, 2021

Do I need to buy homeowners insurance if I live in a condo?

If you own a condo, it's highly recommended that you purchase a condo insurance policy, which differs from standard homeowners insurance.

If you’re thinking of buying a condo, you may be curious how insurance works as a condo unit owner. Since you’re already paying condo association fees for your building’s maintenance and repairs, do you even need to purchase homeowners insurance?

While it’s true that condo associations are usually responsible for ensuring all aspects of a condominium building, condo unit owners will see a gap in coverage if they don’t purchase their own condo insurance. Condo insurance covers many things, such as your personal belongings, liability, and more.

Here, we cover the type of insurance that condo associations provide, what condominium insurance covers, and the differences between homeowners and condo insurance. And when you’re ready to begin comparing condo insurance policies, the Insurify tool can pull together the best quotes in your area within minutes.

Does My Condo Association or HOA Include Insurance?

If you live in a condo, chances are you pay condo association or homeowners association fees. These fees are meant to cover repairs, upgrades, and maintenance on shared common areas that all condo owners may use, such as hallways, landscaping, and any community amenities, like a pool or gym.

Along with the upkeep of shared common areas, your condo association likely maintains property insurance on the condo complex. Some states, like Florida, legally require condo associations to maintain adequate property insurance for the replacement cost of the property.

If you’re unsure of what exactly your condo association covers, you should read the condo association ‘s bylaws and master insurance policy. The condo association’s master policy should be a thorough document that lets all condo owners know who is responsible for damages on any area of the condo unit and property.

As mentioned, shared common areas are usually covered by the condo association. However, in some cases, condo owners may be partially responsible for severe damages to shared areas if they are found responsible for the damage. In cases like these, loss assessment coverage can help protect you.

What Type of Insurance Does My Condo Association Provide?

The structure of responsibility can be tricky within a condo complex. The condo owner has freedom and responsibility over their unit, while the condo association has a responsibility to the property your condo unit sits on. But what about structural issues within your individual unit, like built-in appliances and flooring? Who is responsible for any damages that occur within your unit?

It all depends on your condo association ‘s insurance policy. Three of the most common policies you’ll see are a bare walls policy, single entity coverage, and an all-inclusive policy.

  • Bare Walls Policy: Sometimes referred to as a “walls-in policy,” this covers the structure of the condo, like the walls, floors, and ceilings of the condo unit. It does not cover anything attached to them, like carpets, light fixtures, or appliances.

  • Single Entity Coverage: This insures everything in the bare walls policy as well as what was originally part of the condo’s individual unit when it was built, like fixtures or appliances. While this policy covers a wider scope, it does not cover the personal belongings of the condo owner or residents or any upgrades made to the condo unit.

  • All-Inclusive Policy: This is the highest level of coverage, covering everything that a single entity coverage does, plus more. With this option, any enhancements made to original elements of your condo unit (appliance upgrades, new fixtures, etc.) are covered.

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What Does Condo (HO-6) Insurance Cover?

The insurance that your condo association provides is not all-encompassing. Without purchasing condo insurance (also known as HO-6 insurance) on your own, you may experience gaps in coverage when it comes to critical areas, like your personal belongings and liability protection.

Each condominium insurance policy will differ in terms of coverage, but in general, you should look for the following coverages.

  • Personal property coverage: This covers the personal belongings that you own, like furniture, electronics, and clothing. When it comes to personal property coverage, most insurance policies offer actual cash value or replacement cost coverage. Replacement cost coverage is often the more expensive option because it covers the replacement cost of stolen or destroyed items, while actual cash value covers the depreciated value of any belongings that are lost or stolen.

  • Personal liability coverage: This covers you in the event of an accident that results in injury or property damage within your condo unit. When you have personal liability coverage, you can make claims to cover medical expenses, legal fees, and more—up to your policy’s coverage limits.

  • Loss of use coverage: Also known as additional living expenses insurance, this helps cover costs you may incur in the event that your condo unit is uninhabitable. For example, if your condo unit is heavily damaged due to a fire, loss of use coverage can help reimburse additional living expenses, like a hotel stay or even restaurant bills. Each policy will have its own set of covered perils for loss of use coverage and come with coverage limits.

  • Loss assessment coverage: Although your condo association has insurance, the cost of building or property repairs may exceed the policy’s coverage limit. In this case, the remainder of the bill is split between all condo unit owners. Loss assessment coverage can save you from paying out of pocket by providing coverage toward the master policy limit or deductible for a covered loss.

  • Dwelling coverage: Depending on your condo association ‘s insurance policy, you may want to purchase dwelling coverage. If your association has bare walls coverage, you probably want to insure your unit’s interior with dwelling coverage. If you have all-inclusive coverage, this may not be necessary, depending on the coverage details of your condo association ‘s policy.

As you review what your condo insurance covers, remember to also review the covered perils. A peril refers to the cause of damage or loss of property, and a covered peril is an event that your insurance company agrees to reimburse you for if you file a claim. Common covered perils include:

  • Fire damage

  • Lightning strikes

  • Windstorms and hail

  • Weight of snow and ice

  • Theft

  • Vandalism

What Isn’t Covered by Condo (HO-6) Insurance?

Now that you know the items that condo insurance does cover, it’s just as important to highlight what condo insurance does not cover. Below is a list of perils that are usually not covered:

  • Floods

  • Earthquakes

  • Damage from birds, rodents, and insects

  • Natural wear and tear

  • Water damage from sewer backups or pump overflows

  • Intentional injuries to others or destruction of property

Depending on where you live, it may make sense to purchase additional coverage to help fill in missing gaps. For example, if you live in a condo by the beach in an area known to experience hurricanes, it makes sense to purchase flood insurance.

You can also purchase an umbrella policy to offer extra coverage beyond your existing condo insurance policy. For example, if your policy’s liability insurance has liability limits on the low side, you can buy umbrella insurance for extra coverage in this area and others.

What’s the Difference Between Homeowners Insurance and Condo Insurance?

A homeowners policy and an HO-6 policy will differ in coverage details, cost, and more. This is due to the differing ownership structures of a single-family home and a condo unit. With a single-family home, the homeowner is responsible for the home’s interior, its exterior, and the plot of land it sits on. It covers a larger scope and is sometimes referred to as “ property insurance.”

As a condo owner, you own one individual unit of many inside a building. Because the building and the building’s property are shared by all condo owners, you are responsible for the interior walls of the unit. The condo association is primarily responsible for the building’s exterior and the property.

That being said, the insurance cost for condos tends to be cheaper than a homeowners insurance policy because there is less to cover.

FAQ: Condo Insurance

  • One area you can save on is opting for actual cash value for personal property coverage instead of replacement cost coverage. You can also ask your insurance company if they offer any bundling discounts. For example, you may be able to purchase both auto insurance and condo insurance from the same insurer for a discounted rate.

  • There aren't any federal or state laws that require you to purchase condominium insurance. However, if you are applying for a mortgage loan, your lender may require you to purchase and maintain condo insurance. Regardless, it's a good idea to protect your investment with condo insurance coverage.

  • The national average annual premium is $506, which is substantially cheaper than home insurance. Some factors that may influence how much your condo insurance policy costs include the condo's location, its age, the amount of coverage you choose, your credit history, and whether you choose a high or low deductible.

  • If you're a renter, you should consider purchasing renters insurance. Condo insurance is intended for condo owners.

Find the Best Condo Insurance Rates in Minutes

Before you begin your search for condo insurance, make sure to carefully read your condo’s master insurance policy. Once you have a clear understanding of what’s covered by your condo association, you will know what you actually need covered. That way, you don’t overspend on unnecessary coverage limits or come across any unexpected gaps in coverage.

When you’re ready to compare rates, it only takes a few minutes to get a condo insurance quote and compare your coverage options. With Insurify, you can easily and anonymously shop for the best insurance quote by filling out one quick form online. Try it today!

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Charlotte Edwards
Charlotte Edwards

Insurance Writer

Charlotte Edwards is a freelance writer with a passion for educating others in the areas of personal finance, health, and education. An educator-turned-writer, she has written for publications worldwide over the past decade. In her spare time, she enjoys reading, watching classic movies, and spending time with her husband and two children. You can learn more about her work and life abroad at www.livinginchinawithkids.com.

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