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What is condo (HO-6) insurance?

Updated Dec 01, 2023

Key takeaways

  • Condo insurance usually covers the interior of your condo unit, personal belongings, liability exposure and coverage for temporary living expenses after a covered claim.
  • Bankrate’s research revealed that State Farm, Allstate and Liberty Mutual provide some of the best condo insurance policies.
  • The National Association of Insurance Commissioners reports that condo insurance costs an average of $512 per year.

Your condominium is your home, and you want to make sure that it is protected in case the worst-case scenario happens. Condo insurance or dwelling insurance for your condo may  protect you from the financial challenges that can arise from a disaster that causes significant damage. Condo insurance like HO-6 policies may offer protection and peace of mind for your home, as long as you find a policy that works best for you.

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What is condo insurance?

Condo insurance, also called an HO-6 policy, may help cover repair costs and financial losses arising from covered damages to the condo or claims against the condo owner. Condo insurance works in conjunction with a policy purchased by the condominium complex’s management, typically called HOA insurance or a master policy.

Several types of HOA insurance policies provide different levels of protection for unit owners. Since HOA policies generally only cover the complex’s common elements or shared structures, you will likely want to purchase an HO-6 policy to provide coverage for your specific condo and the personal belongings within it.

What does condo insurance cover?

HO-6 policies generally cover the same types of perils as homeowners insurance policies do for single-family homes, such as fire, explosions and theft. Typically, condo insurance policies include the following coverage types:

  • Dwelling coverage: This type of insurance takes care of the interior of your condo, covering things like sheetrock and flooring. However, it usually doesn't cover shared structural elements like the roof, which is usually handled by the HOA insurance.
  • Personal liability coverage: Personal liability coverage can step in to help cover expenses if someone sues you over something that happened in your condo. This includes  lawyer fees, court expenses, a person’s injuries and a court settlement.
  • Personal property coverage: This helps pay to replace personal belongings, such as furniture, clothing and electronics if a covered peril damages them or they are stolen.
  • Guest medical payments coverage: When a guest sustains an injury in your condo that you are not liable for, guest medical payments coverage may help pay the medical bills up to your policy limit.
  • Loss of use coverage: When a covered loss requires you to temporarily move out of your condo, your loss of use coverage can help pay accommodation and meal costs. If included in your policy, loss of use coverage usually pays the difference between your normal expenses and relocation costs.

It is likely important to know whether your policy covers the actual cash value or replacement cost of the items damaged by a covered peril. Replacement cost coverage offers broader financial protection as it pays the entire amount necessary to replace items. On the other hand, actual cash value only pays the depreciated value since the original purchase. Replacement cost coverage may be included in your policy already or available as an endorsement from your carrier.

What does condo insurance not cover?

While most condo insurance policies include the coverage listed above, there are typically specific exclusions from the standard coverage. Although separate policies and riders can often be purchased to offer the necessary coverage, standard condo insurance policies typically exclude:

  • Damage from earthquakes and flooding
  • Outdated systems or equipment that need to be brought up to code
  • Damage from leaks or sewer backup

To provide additional financial protection, you may want to consider these add-on coverage options:

  • Unit assessment coverage: If the HOA charges an additional assessment to condo owners to pay for a covered loss, this add-on may cover a condo owner’s share of the assessment.
  • Umbrella policy: This is a separate policy that increases your overall limit of liability protection.
  • Scheduled personal property: Personal property coverage may have limited coverage for high-value items. This is additional coverage for itemized expensive items such as jewelry, furs, art, fine wine or collectibles. This is often referred to as a “floater.”

HOA insurance vs. condo insurance

HOA insurance usually includes two coverage types: liability and property. The property coverage component covers shared common areas from covered perils. The liability coverage of a master policy may help pay medical costs and legal expenses if someone sustains an injury in a common area, like a clubhouse, lobby or swimming pool, but does not cover injuries sustained by guests within the walls of your condominium.

Condo management can typically choose between three types of property coverage. The type of property coverage your HOA has may impact how much condo insurance you need.

  • All-in: All-in coverage provides the most financial protection for unit owners, as it covers the condo’s structure and any shared property. Additionally, it typically covers improvements you have made to your condo, like custom tile and wall coverings.
  • Walls-in: Also called single entity coverage, this provides slightly more financial protection than a bare walls policy. It covers the building structure and systems, along with built-in features within units, like kitchen cabinets and recessed bookcases.
  • Bare walls: This type of coverage provides the least financial protection for unit owners, as it only covers common areas and the building structure and its systems, like electrical wiring and plumbing. Your condo’s interior is not included.

Before purchasing an HO-6 condo policy, it may help to know how much coverage the HOA policy already provides. If your complex carries an all-in policy, you may not need to carry much dwelling coverage. However, HOA policy exclusions are also important. For example, a master policy may cover the interior structure of your condo but exclude non-standard fixtures that you add, like expensive imported tile or a custom stained-glass window.

Do I need condo insurance?

Anyone who owns a condominium or townhouse may want to consider purchasing a condo policy, and if you have a mortgage on the property, the lender usually requires it. Most standard condo policies include $100,000 to $300,000 in personal liability, which you can usually increase to fit your needs. If you think you need more liability protection than a standard policy can provide, you could consider purchasing an umbrella policy, which kicks in after you reach the liability limit of your condo insurance policy.

Most insurance companies will help you determine the dwelling coverage amount you need based on the square footage of the condo and finishes to rooms like the kitchen and bathrooms. If you want to get a ballpark idea about the coverage level you need, research the cost of construction in your area to calculate roughly how much it would cost to completely rebuild your condo, including materials, fixtures and labor. Condo owners covered by an all-in master policy may only need enough dwelling coverage to pay for losses the HOA policy excludes.

The replacement cost of your personal items should typically be considered as well. Standard policies usually provide actual cash value personal property coverage, which only pays the depreciated value for your belongings. But most condo insurance carriers also offer optional replacement cost coverage, which could replace your belongings at current market prices.

The best condo insurance

Finding the best condo insurance company usually involves understanding your needs and comparing quotes. Bankrate looked at factors like coverage offerings, discounts, availability and third-party scores from companies like J.D. Power and AM Best to find the best condo insurance companies. Keep in mind, though, that your own needs are unique to your situation, so the best condo company for you may differ.

State Farm

State Farm’s standard condo policies provide all the basic coverage types, plus an impressive selection of optional coverage offerings. Counterfeit money and forgery expense protection pays up to $1,000 if a thief makes a fraudulent transfer from your account or if you unwittingly receive a counterfeit bill. In the event of equipment failure or a power outage, refrigerated products coverage may help pay to replace spoiled food in your refrigerator or freezer.

Learn more: State Farm Insurance review

Allstate

Allstate’s condo insurance policies are highly customizable with potential endorsements for water backup insurance, building code coverage, electronic data recovery and more. Allstate may be a great company for condo owners who occasionally rent their unit. The carrier’s HostAdvantage coverage adds extra coverage while home-sharing.

Learn more: Allstate Insurance review

Liberty Mutual

Liberty Mutual advertises a number of potential discounts for HO-6 policyholders, including protective devices, bundling and claims-free. Liberty Mutual condo insurance does not automatically include medical payments coverage, but it is available as an endorsement along with other add-on options. Liberty Mutual also offers landlord insurance if you’re interested in renting out your condo.

Learn more: Liberty Mutual Insurance review

How much does condo insurance cost?

Although costs vary significantly according to state and local factors, the average annual cost of condo insurance in the United States in 2018 was $512, according to the National Association of Insurance Commissioners.

Condo insurance providers set rates based on several factors, including:

  • Age and type of construction
  • Coverage types and amounts
  • Deductible level
  • Location
  • Policyholder’s claims history
  • Policyholder’s credit history (in most states)
  • Policyholder’s marital status (in most states)
  • Proximity to a fire station and fire hydrant

Other factors, like whether you have a pool or certain dog breed, may also increase your rates due to higher liability risks. Insurers usually charge higher rates for condos located in areas prone to natural disasters such as hurricanes and wildfires.

How can I save on condo insurance?

Requesting and comparing quotes may help you narrow down your list of cheap condo insurance providers. From there, the following strategies may help you save even more on your premium:

  • Ask for discounts: Discount type and amount will vary by carrier, but most home insurance companies offer at least a few to potentially lower your rates. Common options include bundling discounts, claims-free discounts and protective devices discounts.
  • Invest in condo improvements: Improving your unit’s safety features and weather resistance may earn you a lower insurance premium.
  • Improve your credit history: In states where credit is allowed as a home insurance rating factor, improving your credit score may lower your premiums.
  • Increase your deductible amount: If you agree to pay more out-of-pocket in the event of a claim, your monthly premium payment is likely to be lower. However, most insurance professionals caution that you should keep your deductible low enough that you could pay it out of pocket in the event of damage.

HO-6 vs. HO-3 policies

The key difference between HO-3 and HO-6 policies is that HO-3 policies cover single-family homes and HO-6 policies cover condominiums. As such, an HO-3 policy covers damage to the entire home, including internal and external structures of the home, as well as personal belongings and owner liability.

An HO-6 policy typically includes many of the same coverage types, but covers just the interior structure of the condo. The exterior elements of the building, like the roof, are usually covered by the HOA master policy.

Frequently asked questions

Written by
Cate Deventer
Former Writer & Editor, Insurance
Cate Deventer is a writer, editor and insurance professional with over a decade of experience in the insurance industry as a licensed insurance agent.
Edited by Editor, Insurance