What is condo (HO-6) insurance?

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Like a homeowners policy, if a covered loss damages your condominium, a condo policy can help pay to repair elements like drywall and cabinets and replace belongings such as clothing and furniture.

A condo policy, also known as an HO-6, works in partnership with your condominium association’s insurance to protect the shared spaces of the complex. Insurers offer several types of coverage for condominium communities. The level of coverage your community provides will help you determine the amount of protection you need to cover your individual unit. Understanding how condo insurance works can ensure that you choose the right protection for your valuable real estate.

What is condo insurance?

Condo insurance, or an HO-6 policy, protects specific elements of a condominium unit, along with the personal belongings of its owners. Condo insurance works in conjunction with a policy purchased by the condominium complex’s management, typically called HOA insurance or a master policy.

The insurance industry refers to condo insurance as an HO-6 policy. There are several types of HOA insurance policies which provide different levels of protection for unit owners. Since HOA policies generally only cover the complex’s shared structures, you may purchase an HO-6 to provide coverage for your condo and the property within it.

What does condo insurance cover?

HO-6 policies cover the same types of perils as homeowners policies, like explosions, fire, hail, theft and windstorms. Typically, condo insurance policies include four or five types of coverage:

  • Building property: This protects the interior of your condo, including damage to elements like sheetrock and flooring.
  • Guest medical payments: When a guest sustains an injury in your condo, guest medical payments coverage can help pay the medical bills, such as the emergency room fee, doctor bill and rehabilitation costs.
  • Loss of use: When a covered loss requires you to temporarily move out of your condo, your loss of use coverage can help pay accommodation and meals costs. If included in your policy, loss of use coverage usually pays the difference between your normal expenses and relocation costs.
  • Personal liability: Personal liability coverage helps cover legal fees if someone sues you over an incident that occurs in your condominium, including attorney fees, court costs and a court settlement.
  • Personal property: This helps pay to replace personal belongings, such as furniture, clothing and electronics, if a covered peril, like a fallen tree, damages them.

Although separate policies and riders can be purchased to offer the necessary coverage, standard condo insurance policy typically exclude:

  • Earthquake and flood insurance
  • Outdated systems or equipment that need to be brought up to code
  • Damage from leaks or water backup

HOA insurance vs. condo insurance

HOA insurance includes two types of coverages, liability and property. The liability coverage of a master policy can 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 choose between three types of property coverage:

  • All-in: All-in coverage provides the most 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.
  • Bare walls: This type of coverage provides the least 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.
  • Single entity: Single entity coverage provides slightly more 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.

Before purchasing an HO-6 condo policy, it helps 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.

Even similar losses are likely to result in different coverages. Here are a few examples of how HOA and HO-6 policies cover losses:

Loss scenario HOA HO-6
Guest injury What’s covered: Medical expenses
For: Injuries that take place in a common area, like the building elevator
What’s covered: Medical expenses
For: Injuries that take place within the condo, like a kitchen
Break-in and burglary What’s covered: Repair and replacement costs
For: A building structure, like a door, was damaged
What’s covered: Repair and replacement costs
For: Personal property, like jewelry, was stolen from within your unit
Building fire What’s covered: Replacement costs
For: Structural losses to building
What’s covered: Replacement costs, loss of use
For: Damage to your personal belongings and temporary living expenses resulting from being displaced

Who needs 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 may require it. The coverage you purchase is important, and 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 purchase 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 and 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 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

When shopping for condo insurance, you may want to consider providers that offer building property, loss of use, medical payments, personal liability and personal property coverages in their standard policies. Since cost is an important factor for many condominium owners, good discount programs may cause certain providers to stand out. To maximize your protection, also consider looking for insurers that offer optional coverages for your specific needs. All our top condo insurance picks ranked among the top 10 in the 2020 J.D. Power Home Insurance Study.

Amica

Amica ranked second in customer satisfaction for home insurers with 853 out of 1,000 points. In addition to standard coverages, Amica offers coverage for debris removal, which is often needed after a covered loss, like a fire. There are also optional coverages for your electronics, identity fraud that impacts your credit card and extended coverage for expensive items like jewelry, fine art and furs.

Erie Insurance

Erie’s standard condo policies cover all the bases, but also have options for debris removal coverage and lock replacement coverage, which pays to rekey or replace locks after a burglary. Following a covered loss, your Erie policy could also pay for temporary repairs needed to prevent further damage. Erie policies also have a unique feature that pays the cost of emergency first aid rendered to people or pets.

State Farm

State Farm’s standard condo policies provide all the basic coverages that many folks need, but it also provides an impressive selection of optional coverages. 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 can help pay to replace spoiled food in your refrigerator or freezer.

You can also add a rider to your State Farm condo insurance to help pay for damage to plants, shrubs and trees destroyed in your condo by a covered loss.

How much does condo insurance cost?

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

  • Age and type of construction
  • Coverage types and amounts
  • Deductible level
  • Location
  • Policyholder’s age
  • Policyholder’s credit history
  • Policyholder’s marital status
  • Proximity to a fire station and fire hydrant

Other factors, like whether you have a hot tub, could 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. Requesting quotes from several financially solid providers could help ensure you find the best coverage for your budget and needs.

Frequently asked questions

Will condo insurance pay for structural damage to my condo?

It depends. The building property coverage of a condo policy will pay for structural losses to the interior of your unit, and the complex’s master policy should cover any exterior wall damage.

If I fall and sustain an injury in my condominium, will my condo policy cover my medical expenses?

Whereas medical payments coverage is typically included to cover potential medical expenses of guests injured in your condo, standard condo policies will not pay your medical bills if you sustain an injury at home.

If my building has an all-in HOA policy, do I need condo insurance?

Since HOA policies only protect the condo’s primary and shared structures, you may want to consider buying a condo insurance policy to protect your personal property and obtain coverage for loss of use and guest liability. It could also help protect home improvements made to your unit.