Condo insurance works in much the same way as 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.
But your condo policy must work in partnership with the policy your condominium association or management carries to protect the entire 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 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. Condominium managers can choose from several types of HOA insurance policies that provide different levels of protection for unit owners. HO-6 policies are flexible, allowing condo owners to customize their policies based on their individual needs and the structural elements not covered by the HOA policy.
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: Also called dwelling coverage, building property coverage protects the interior of your condo. For example, if a grease fire damages your kitchen, your dwelling coverage can help pay the cost to replace the sheetrock and flooring.
- Guest medical payments: When a guest sustains an injury in your condo, your guest medical payments coverage can help pay the medical bills. For instance, if your child’s friend falls out of a bunk bed during a sleepover and sprains an ankle, this type of coverage will help pay 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. Loss of use coverage usually pays the difference between your normal expenses and relocation costs. For example, if you usually spend $500 per month on groceries but spend $1,000 in restaurants while you’re displaced from your condo, your loss of use coverage can help pay the additional expense. Some insurers don’t include loss of use coverage in standard condo policies.
- Personal liability: Personal liability coverage helps cover legal fees if someone sues you over an incident that occurs in your condominium. For instance, if the parents of the child who sprained his ankle sues you for his pain and suffering, your personal liability coverage can help pay attorney fees, court costs and a court settlement.
- Personal property: When a covered peril destroys your home furnishings, your personal property coverage can help pay to replace them. Personal property coverage pays for a wide range of belongings. For example, if a tree falls through your bedroom, your personal property coverage can help replace items such as your clothing, dresser, tablet computer and TV.
Like most standard homeowners policies, condo insurance doesn’t cover losses caused by earthquakes or floods. Many major home insurance companies sell separate earthquake and flood insurance policies.
Typically, condo policies don’t cover the cost of bringing your condo up to current building code, either. For instance, if a fire destroys the interior of your condo, the contractor may need to replace outdated electrical and plumbing systems for your home to pass inspection. However, most insurers offer optional ordinance of law coverage, which helps pay the cost of restoring your home to code.
A standard condo policy may exclude damages caused by water backup or seepage. Nonetheless, many providers allow you to add a water backup rider to your condo policy.
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. The HOA policy doesn’t offer liability protection for you if someone sustains and injury inside your condominium.
Condo management can choose between three types of property coverage:
- All-in coverage: All-in coverage provides the most protection for unit owners. It covers all real property in the condominium community, including the building structure and the interior of each unit. An all-in policy may also cover improvements you’ve made to your condo, like custom tile and wall coverings.
- Bare walls coverage: This type of coverage provides the least protection for unit owners. It covers the building structure and its systems, like electrical wiring and plumbing. Bare walls coverage covers common areas and structural elements such as roofs and exterior walls, but it doesn’t cover the structural elements and fixtures of your condo’s interior.
- Single entity coverage: 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, you need to know how much coverage the HOA policy provides. If your complex carries an all-in policy, you won’t need to carry much dwelling coverage. However, you also need to know what the HOA policy excludes. 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.
Here are a few examples of how HOA and condo policies cover losses:
- Your guest sustains an injury in your building’s common elevator. The HOA policy can cover her medical costs.
- Your guest slips and falls in your kitchen. Your condo policy’s medical payments coverage can help pay her expenses.
- A speeding driver loses control of his car, crashes through your patio fence and slams into your condo, damaging the exterior wall and destroying your lawn sculpture. The HOA policy would pay to repair the fence and exterior wall and your condo policy’s personal property coverage can help replace the lawn sculpture.
- A burglar pries open the front door of your high-rise condominium building and steals jewelry from your bedroom. The HOA policy would pay to repair the damaged door and your condo policy would cover the stolen jewels.
- A fire ravages several condo units in your building. If your community carries an all-in HOA policy, it will pay for all structural losses, including your unit. The personal property coverage of your HO-6 policy will help pay to replace your belongings.
Pay attention to what type of insurance you have to know if a similar scenario would apply to your situation.
Who needs condo insurance?
Anyone who owns a condominium or townhouse needs a condo policy. When buying a condo policy, don’t skimp on coverage levels. 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, purchase an umbrella policy, which kicks in after you reach the liability limit of your condo insurance policy.
To determine your dwelling coverage level, research the cost of construction in your area. Calculate how much it will 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.
When calculating how much personal property coverage you need, take an inventory of all your belongings and determine how much it would cost to replace them. 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. With replacement cost coverage, you can replace your belongings at current market prices.
The best condo insurance
When you shop for condo insurance, look for providers that offer building property, loss of use, medical payments, personal liability and personal property coverages in their standard policies. Cost is a factor for many condominium owners, so choose a company that has good discount programs. To maximize your protection, also look for insurers that offer optional coverages that fit your specific needs. All our top condo insurance picks ranked among the top 10 in J.D. Power’s 2019 Home Insurance Study.
Amica ranked #1 in the Power study, with five-star ratings in all categories. Amica offers all the basic coverages in its standard policies, along with debris removal coverage to pay the cost of removing debris following a covered loss such as a fire. Amica’s standard policies also include theft coverage, which protects personal property such as cameras, cellphones and computers when you’re on the road.
Amica also offers a selection of optional coverages. Computer coverage gives you an added layer of protection for expensive computers, smartphones and tablets and identity fraud coverage reimburses you for identity theft expenses and fraudulent charges to your credit card. To protect your personal belongings, Amica offers optional replacement cost coverage, along with scheduled personal property coverage for your most valuable items, like collectibles, jewelry and musical instruments.
Erie’s standard condo policies cover all the bases but also include debris removal coverage and lock replacement coverage, which pays to rekey or replace locks after a burglary. Following a covered loss, your Erie policy will 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’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
- Policyholder’s age
- Policyholder’s credit history
- Policyholder’s marital status
- Proximity to a fire station and fire hydrant
Features of your condo, like a hot tub, can increase your liability rate. Folks with dogs usually pay more for condo insurance, due to the risk of bites. Insurers usually charge higher rates for condos located in areas prone to natural disasters such as hurricanes and wildfires.
When shopping for condo insurance, request quotes from several providers. Look for insurance companies with sound financial ratings and select a policy that provides the best coverage for your budget.
Average annual condo insurance premiums vary widely by location. Based on a policy with $300,000 in personal liability coverage, $60,000 in personal property coverage, with a $1,000 deductible, here are a few sample average annual rates:
- Bloomingdale, Georgia (31302) – $1,103
- Memphis, Tennessee (38104) – $791
- San Francisco, California (94109) – $590
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. If an exterior wall sustains damage, the condominium complex’s HOA insurance should cover the damage.
If I fall and sustain an injury in my condominium, will my condo policy cover my medical expenses?
Most standard condo policies won’t pay your medical bills if you sustain an injury at home. Some insurers offer a limited amount of coverage to pay for emergency first aid expenses rendered to members of your household or your pets. Medical payments coverage, included in most standard condo insurance policies, will pay the medical expenses of a guest who sustains an injury in your home.
If my building has an all-in HOA policy, do I need condo insurance?
Yes. An HOA policy will only pay for damages to the structure of your condominium. Condo policies include other needed protections, like loss of use, medical payments, personal liability and personal property coverages. Depending on the exclusions of the HOA policy, you may also need building property coverage to pay for losses to modifications made to your unit, like custom cabinets.