Condo Hazard Insurance: What It Is and How It Works

Two types of insurance generally cover condos: the condo association’s master policy and the condo owner’s individual policy.

Condo hazard insurance is part of the individual policy you buy to deal with property damage to the physical parts of your condominium. Your insurer will spell out what’s included as a covered loss, just as they would with a traditional home insurance policy.

Here’s what you need to know about the hazard portion of your condominium insurance.

What is condo insurance?

When you buy a condo, one of your financial decisions is whether to get insurance for it. Generally, condo insurance covers what you’d expect with a traditional homeowners policy. This includes damage to your personal belongings as a result of certain natural disasters and other issues, as well as the cost of repairs to the interior walls and other structural elements of the condo unit.^[1]

Your condo insurance can also cover liability claims, medical costs due to injury, and other covered losses.

Condo insurance provides you with financial assistance to make repairs and cover the replacement cost of damaged or destroyed personal items. This can greatly reduce your financial risk in the event of a covered loss.

Condo insurance vs. HOA master policy

The main difference between your individual condo insurance and the homeowners association master policy is that the condo association’s master policy generally covers shared community amenities — such as the tennis courts, parking lots, and pools. On the other hand, your individual condo insurance policy is what you’re responsible for inside your own unit.

You can choose from three main types of insurance coverage for condo association policies or a co-op insurance master policy:

• Bare walls: The condo association covers shared areas and structures, but you’re responsible for interior walls and fixtures.

• Single entity: This condo insurance coverage includes shared areas and structures and fixtures that were part of the condo’s original construction.

• All-inclusive or walls-in: A condo association can use this comprehensive policy to cover even the interior walls of your unit. As such, you don’t have to worry about separate policies unless you want your own condo insurance policy to take care of your personal belongings, because walls-in coverage doesn’t include them.

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What does condo hazard insurance cover?

Hazard insurance is part of the coverage for the physical structure of a home or condo.^[2] With a single-family home, this is called an HO-3 policy. Condo owners have an HO-6 policy, while renters insurance is often referred to as an HO-4 policy.

In any case, the hazard insurance portion of the policy covers 15 main perils:

• Lighting or fire

• Smoke damage

• Hail or windstorm

• Riots

• Explosions

• Aircraft damage

• ​Falling objects

• ​Theft

• Vandalism

• Volcanic eruption

• Vehicle damage

• ​Weight of snow, sleet, or ice

• Damage caused by sudden and accidental issues related to a home heating, air conditioning, or fire suppression system

• Water damage caused when pipes freeze or burst or when an appliance breaks

• Most electric current damage

Your insurance agent can explain this type of event insurance policy, and you can add other coverage to meet your unique needs.

What condo hazard insurance doesn’t cover

Your condo or co-op unit insurance won’t cover all natural disasters. As with a regular homeowners insurance policy, your condo insurance might not cover:

• Floods

• Earthquakes

• Mudslides and other earth movements

• Hurricanes

• Intentional damage

• Damage due to loss of a transistor or similar electrical component

Depending on where you live, you might need additional coverage for some of these perils.

Other parts of condo insurance policies

While hazard coverage is part of a condo insurance policy, it’s not the only part you need to consider.^[3] Instead, your condo HOA likely won’t provide other types of coverage in its own master insurance policy, including the following coverages.

Personal property coverage

Your condominium association master condo coverage won’t include your personal belongings, so your individual policy will need to take that into account. You can decide how much coverage you need to replace the contents of your unit if the contents are damaged or destroyed.

Personal liability coverage

If someone has an injury in your condo unit or faces other issues, liability insurance helps cover medical expenses and legal costs.

Additional living expenses coverage

Your regular condo policy usually includes coverage for the living expenses you incur if you need to move out temporarily while your condo undergoes repairs.

Optional coverages

​You can also add different optional coverages based on your needs, including:

• Valuables coverage: Basic contents coverage might not cover jewelry or artwork.

• Water backup, flood damage, earthquake, hurricane, and other hazards coverage: These protect against perils that standard policies don’t generally include.

• Umbrella policy: This allows you a higher coverage limit in the event someone sues you. Umbrella insurance can help with legal fees and medical bills if your regular coverage isn’t enough.

• Landlord condo insurance: This can potentially be a good idea if you’re renting out a unit to tenants.

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Cost of condo insurance

Various factors affect the cost of condo insurance, including the size of the condo, its age, and where you live. Your level of coverage, as well as how much coverage you choose, can also affect cost. For example, for $200,000 of coverage, you might pay between $856 and $4,000 per year, depending on the insurer you choose and your unique factors.

The table below shows the average annual cost for $200,000 in dwelling coverage from the five cheapest national condo insurance companies.

How much condo hazard insurance you need

The amount of condo hazard insurance you need depends on your situation and how much you can afford to pay if you need to cover the cost of repairs or replacing your belongings. Your mortgage lender may also require you to carry a certain amount of coverage.

State law can also set your liability levels, so make sure you understand what’s required before you get a policy.

How to save on condo insurance

​If you’re worried about your costs as a condo owner, here are some ways to save money on condo insurance:

• 

  Comparison shop

  This can help you make sure you’re getting the best condo insurance price. Compare quotes from at least three to five insurance companies before making your choice.

• 

  Bundle insurance

  Combining your condo insurance policy with a boat insurance policy, other auto policy, or life insurance policy from the same company can reduce your overall cost.

• 

  Ask for discounts

  You might get a discount for belonging to certain organizations or for taking other actions, such as adding safety features.

• 

  Set a higher insurance deductible

  If you have an emergency fund and can handle a higher out-of-pocket cost, you can get a break on the monthly premium for increasing your deductible.

• 

  Understand minimums

  You can get a lower rate if you stick to minimum-coverage amounts.

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