Condo Insurance Guide: Coverage, Cost, and How It Works

If you just bought a condo, you’ll need a special homeowners insurance policy.

Condo insurance, also called HO-6 insurance, is a type of homeowners insurance specifically for condo and co-op owners. Condo and homeowners associations and mortgage lenders typically require HO-6 coverage, so if you’re thinking about buying a condo, you’ll want to factor this into the cost.

Condo insurance covers your condo’s interior and some fixtures, your personal belongings, and your liability as a property owner. Policies list covered events and perils, like burglary, fire, and windstorms.

Here’s what you need to know about condo insurance, master condominium policies, and additional coverages.

What is condo insurance (HO-6)?

Condo insurance is home insurance for condo owners, with a notable difference: You’re not insuring the entire structure yourself. The condo or homeowners association (HOA) master insurance policy covers many shared assets that a typical homeowners insurance policy would cover, though owners contribute to shared costs through maintenance fees or condo association dues.

Condo insurance includes personal property and personal liability coverage within the walls of your condo unit. Additionally, policies can include loss of use and loss assessment coverage.

Most lenders require you to buy condominium insurance if you have a mortgage. HOAs also typically require condo insurance.

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What condo insurance covers

You’ll need condo insurance to protect your home and personal property. A standard policy covers property damage from covered perils and personal liability and typically includes these coverages:^[1]

• 

  Dwelling coverage

  How much dwelling coverage you need depends on your HOA master policy. This typically covers interior walls, fixtures, and sometimes appliances.

• 

  Personal property coverage

  This is never part of an HOA policy. Personal property coverage often includes theft protection and pays to replace or repair your furniture and belongings in the event of damage or theft.

• 

  Liability coverage

  Personal liability coverage can help cover legal expenses and medical payments if someone incurs an injury in your condo.

• 

  Loss of use coverage

  This pays for additional living expenses, like meals and hotel stays, if a covered peril forces you to move out temporarily.

• 

  Loss assessment coverage

  If damage to a common area exceeds the master policy’s limits, residents may have to cover the difference. This coverage helps pay for that.

What HOA master policies cover

Your building’s master policy covers two risk areas: damage to common areas and general liability.^[2] Common areas you’d see in a master policy include:

• Roof and exterior walls

• Stairs and elevators

• Basement and boiler

• Walkways and hallways

• Lobby and grounds

• Fitness center and pool

• Community rooms

Some master policies cover interior features, so check with your HOA to find out which losses it covers. Here are the three types of HOA insurance:

1. All-in coverage insures the building and fixtures, so owners are responsible only for personal belongings.

2. Bare walls coverage insures shared areas but not interior walls and fixtures.

3. Single entity coverage insures common areas, fixtures, and any originally built structure.

Liability insurance protects the HOA if someone incurs an injury in a common area. It covers legal fees and medical expenses.

HOA master policies protect losses only from covered perils, which include fire, lightning, wind, weight of snow or ice, smoke, and vandalism.

Are HOA master policies enough coverage for condo owners?

HOA master policies don’t entirely cover individual condo owners. Master insurance covers general HOA liability and damage to common areas, not condo owners’ personal liability or belongings. Some master policies include coverage for interior features like counters, floors, and cabinets, but most don’t cover any part of the condo interior, according to the Insurance Information Institute (Triple-I).

A condo association’s master policy isn’t sufficient coverage to protect your condo, and most condo associations and lenders will want you to protect your unit with condo insurance. Going without condo insurance means zero personal property coverage after fires, burglaries, or natural disasters.

Additional condo coverages to consider

You can explore extra coverage if a standard policy doesn’t offer enough protection. Disaster insurance may be important or even required if you live somewhere with a high risk of certain natural disasters. These are some additional coverage options:

• Flood insurance: A condo insurance policy never includes flood coverage. You can purchase flood insurance through the National Flood Insurance Program or certain private insurers. Condo owners with a federally backed mortgage and living in a flood zone have to buy flood insurance.

• Earthquake insurance: Standard policies don’t cover earthquake damage. Coverage is available as an add-on or separate policy from private or state insurers, like the California Earthquake Authority.

• Umbrella liability: Your standard policy includes some liability coverage, but you can get more through an umbrella liability policy. This will help protect you if you’re worried that a lawsuit could wipe out your financial assets.

• Water backup: This covers water damage from sewer, septic, and drain backups not caused by flooding, like from clogged pipes. You can get coverage as an extra policy or add-on.

• Floater: This protects specific valuable items, like jewelry and art, if your condo insurance policy doesn’t entirely cover them. It usually requires a professional appraisal.

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Cost of condo insurance

Several factors affect condo insurance rates, including state laws, location, and coverage amount. The national average annual condo insurance premium is $599. Condo insurance premiums vary between insurers, so it’s generally good to get a condo insurance quote from multiple companies to find the best policy.

The following table shows average monthly rates for condo insurance with dwelling coverage amounts of $200,000, $300,000, and $500,000.

Factors that affect condo insurance rates

Numerous factors affect condo insurance rates. The size, condition, and age of your condo influence your insurance rates since they affect the replacement cost if you have to repair or rebuild.

Personal factors matter, too. Your claims history and credit history, as well as the condo coverage limits and deductible you choose, all affect your condo insurance premiums. Location and risk level factor significantly into condo insurance premiums since high climate risks can lead to expensive damages and claims.

How much condo insurance do you need?

Insurance companies recommend purchasing enough coverage to completely rebuild or repair your condo and replace your belongings.^[3] This could include multiple insurance policies if you live in a disaster-prone area.

When you shop for condo insurance, you’ll have to choose between actual cash value (ACV) and replacement cost value (RCV) coverage. The ACV is the amount needed to fix your condo minus any decrease in value from age or use. The RCV is the amount to repair your condo at today’s supply prices or replace your belongings at today’s cost.

For example, say someone stole or damaged your TV in a covered event. ACV coverage reimburses you for the current, reduced TV price, taking the item’s age and use into account. RCV coverage reimburses you for the cost of replacing your TV with a similar one today.

RCV coverage typically costs more than ACV coverage. Creating an inventory of your possessions with their values will help you figure out which is right for you and whether the increased premiums are worth it.

How to save on condo insurance

Condo insurance premiums can vary by hundreds of dollars, so these are some ways to save:

• Increase your deductible. A higher deductible means lower premiums. If a covered peril damages your condo, you’ll have to cover more up front, so be sure that aligns with your finances.

• Bundle insurance policies. Some companies offer discounts of 5%–15% for bundling home and auto policies, according to Triple-I.

• Maintain good credit. Insurers in most states use credit history to inform how they set your premiums. Paying bills on time and keeping a low credit card balance will help you have a good credit record.

• Compare condo insurance quotes. Ensure you’re not paying for coverage you don’t want or need. Shopping around will help you find the best prices, policies, and coverages.

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How to choose the right condo insurance policy

Follow these steps to choose the right condo insurance policy for your coverage needs:

1. Make a condo inventory. Take stock of all your personal belongings in your condo. Knowing the value of all your items can help you understand how much coverage you need.

2. Determine how much coverage you need. Consider your home inventory, budget, location risk factors, and more. This can help you decide on the right coverage amount for you.

3. Shop around. The best way to find affordable coverage is to compare quotes from multiple condo insurance companies. Compare coverage options, available discounts, average quotes, customer satisfaction, and more for each insurer.

4. Read the fine print. When you select a policy you want to buy, read the policy details before you purchase it. If you have any questions, you may want to reach out to an insurance agent for further insight.

5. Buy your policy. Once you understand the policy, proceed with the purchase.

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