Whether you need condo insurance or homeowners insurance depends on the type of home you live in. Generally, if you are in a single-family residence, you need homeowners insurance. If you are in a condominium, cooperative unit, or a certain type of townhouse, you need condo insurance. Your lender or real estate agent can tell you which policy you should purchase.
What is the difference between condo insurance and homeowners insurance?
Condo insurance and homeowners insurance protect many of the same things, including your belongings, liability, and temporary living expenses after a covered claim. But the biggest difference is which part of the building you are responsible for securing.
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home insurance It generally covers the entire structure of your property (from the roof to the foundation).
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Condominium insurance It generally covers only the interior of your unit, and the condo association insures the building through a master policy.
For example, let’s say a fire damages a single-family home. Your home insurance policy can help pay to rebuild the roof, exterior walls, kitchen, and other parts of the structure, as well as replace damaged belongings inside.
But in a condo, the condo association’s master policy could cover damage to the building itself, while your individual condo owner’s policy would be responsible for your personal belongings and any damage inside your unit.
Read more: Types of homeowners insurance
What home insurance covers
Most homeowners have what is known as an HO-3 policy, which is the most common type of homeowners insurance. (In some cases, you may have an HO-5 policy.)
A standard homeowners insurance policy typically covers:
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Housing coverage for the structure of your home.
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Other structures coverage for things like detached garages, sheds, and fences.
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Personal Property Coverage for Your Belongings
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Liability coverage if someone is injured on your property
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Loss of use coverage if you need to live elsewhere during repairs
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Coverage of medical payments for minor injuries to guests.
Home insurance generally has higher dwelling coverage limits than condo insurance because you are responsible for the entire structure of your property (as opposed to primarily the interior).
Read more: How to read a home insurance policy
What does condo insurance cover?
Condo owners typically have what is known as an HO-6 policy. Unlike homeowners insurance, condo insurance generally protects what’s inside your unit rather than the entire building.
A standard condo insurance policy generally includes:
Loss assessment coverage is typically exclusive to condo owners. It can help pay your share of certain damage-related expenses if the condo association assesses costs among unit owners after a covered loss. For example, if the association determines that roof damage caused by a storm exceeds the master policy’s coverage limits, loss assessment coverage could help cover that difference.
HO-6 vs HO-3: Key Differences
Condo insurance and homeowners insurance share many of the same coverages, but are designed for different types of properties.
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Feature |
HO-6: Condominium insurance |
HO-3: Homeowners Insurance |
|---|---|---|
Why Condo Association Master Policy Matters
A homeowners association’s master policy typically covers the building itself and common areas such as hallways, elevators, clubhouses, pools, and roofs. But what it covers within individual units varies from community to community.
There are three common types of master policies:
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Bare Wall Coverage: It covers the building itself, but little or nothing within your unit. In this case, you may need enough condo insurance to cover floors, cabinets, fixtures, appliances, and other interior features.
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Single Entity Coverage (all-inclusive, excluding upgrades or upgrades): It covers the building plus some standard fixtures within the units, such as cabinets, flooring and built-ins. However, improvements and renovations you have made may not be covered.
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Full coverage: It provides the broadest protection and can cover the building, standard fixtures and many upgrades within the units.
For example, let’s say you renovate your kitchen and install custom cabinets and stone countertops. If a fire damages the unit, coverage for those upgrades may depend on the type of master policy your association has.
Expert tip: The best way to know what your association will cover is to request a copy of the master policy before purchasing your own policy. That way, you can avoid paying for coverage you don’t need or discovering a coverage gap after filing a claim.
Condo Insurance Cost vs. Homeowners Insurance Cost
Condo insurance costs about $490 per year or $40 per month. Meanwhile, home insurance costs about $2,543 per year or $212 per month for $300,000 in home coverage and a $1,000 deductible.
Condo insurance is typically cheaper than homeowners insurance because it insures a smaller portion of the property.
Your premium may also be affected by factors such as:
Read more: How to pay less for home insurance
How to choose the right policy
The best way to know if condo or homeowners insurance is right for you is to ask your real estate agent or lender, or review your home purchase contract to see how your property is classified. Here are a couple of things to keep in mind:
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If your home is classified as a condominium (even if it is technically a townhouse or other structure), you will probably need an HO-6 condo policy.
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If it is classified as a single-family residence, you will most likely need a standard HO-3 home insurance policy.
From there, your biggest challenge will be determining how much coverage you need to purchase.
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For homeowners, that usually means making sure you have enough home coverage to rebuild your home if it is destroyed by a covered loss.
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For condo owners, the first step is to review your condo association’s master policy. Understanding whether the association has a bare-wall, single-entity, or comprehensive policy can help you determine how much interior dwelling coverage you need.
No matter what type of policy you choose, it’s worth checking out:
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The limits of your housing coverage
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Your personal property coverage limits
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The amount of your liability coverage
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Your deductible
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Any optional backup or coverage you may need
Read more: How to buy homeowners insurance
Condo Insurance and Homeowners Insurance FAQs
Is condo insurance required?
Condo insurance is not required by law, but your mortgage lender will likely require it if you are financing your unit. Even if you own your condo outright, condo insurance can help protect your belongings, your liability exposure, and the parts of the unit that aren’t covered by the condo association’s master policy. It’s almost always worth taking.
Does condo insurance cover the roof?
In most condo communities, the roof is covered by the condo association’s master policy because it is considered part of the building structure or a common area. However, coverage may vary depending on your association’s master policy, so always review this document or ask the association to find out exactly what is covered.
What is the difference between a master policy and condo insurance?
A master policy is the insurance policy your condo association has. It generally covers the building itself and shared areas such as hallways, elevators, pools, and clubhouses. Condo insurance is the policy you purchase as the owner of an individual unit. Helps cover your personal belongings, liability, additional living expenses after a covered claim, and certain parts of the interior of your unit.