Whether you’re buying a condo as a starter or buying one for a vacation home, you need to protect your assets with condo insurance. Condo insurance offers many of the same protections as homeowners insurance, covering the structure of your unit and your personal belongings.
Unlike home insurance, a condo policy works in conjunction with additional coverage provided by a homeowners association. If you finance a condo, your lender will require you to purchase a condo policy, and your homeowners association likely will too.
If you’re looking for the best condo insurance, learn how condo insurance works and how to decide how much you need.
hoa vs. condo insurance
Two types of homeowners insurance policies cover a condominium: a homeowners association policy and an individual condominium policy. Building managers buy HOA policies, sometimes called master policies, using money raised from association dues. HOA policies cover the structure of the building, including common areas, elevators, exterior walls, and roofs.
In most cases, HOA policies do not cover individual condo units, so homeowners must purchase condo insurance, known as a HO-6 policy in the insurance industry. Typically, ho-6 policies offer minimal structural coverage. For example, your condo policy may only cover damage to ceilings, floors, and walls inside your unit. ho-6 policies also offer liability and property protection.
what does the hoa cover?
hoa policies may vary based on homeowners association rules and covenants. Bare Wall HOA policies cover collectively owned building areas and bare structural components of individual units, such as ceilings, floors, and walls. A bare walls policy would cover common areas like lobbies and recreation areas, but would not cover items like appliances, cabinets, floor coverings, and wallpaper inside your unit.
Hoa all-in or all-in policies provide the same coverage as bare wall policies, but also cover fixtures inside your unit and structural improvements you’ve made to your home. For example, if a grease fire destroys your kitchen, an all-inclusive policy would provide coverage to replace your cabinets, flooring, and wallpaper, even if you’ve replaced the original items. An all-inclusive HOA policy will not cover personal property like dishes and cookware.
hoa policies typically offer two types of protection:
- Liability Coverage – Liability coverage helps pay for medical expenses when someone is injured in a common area of the condominium complex. For example, if a tenant’s guest slips and falls on a common patio, the association’s liability coverage may pay for medical bills. This type of coverage also helps pay legal fees if someone sues the association for an accident in a common area.
- Property Coverage: Property insurance covers common areas and portions of common property in the complex, such as basements, clubhouses, patios, elevators, exterior walls, gyms, playgrounds, swimming pools, stairs and roofs. If a storm damages the clubhouse roof of your condominium complex, the management can file a claim against the HOA property coverage. Property coverage can cover damage from a variety of perils, including fire, storm, and vandals. Just like a homeowners policy, HOA insurance often excludes damage from earthquakes and floods.
- accidental discharge of water from appliances or plumbing
- burns, cracks or accidental and sudden breakage of systems such as air conditioning and heating systems
- riots and civil unrest
- falling objects
- fire and lightning
- frozen appliances, heating and air conditioning equipment, or plumbing
- volcanic eruptions
- weight of ice, sleet or snow
- wind storms and hail
- dwelling coverage: When a covered peril damages the structure of your condo, your dwelling coverage can help pay for repairs. For example, if a storm causes water damage to your carpet, homeowners coverage can help pay to replace it. Before you buy homeowners coverage, find out if your homeowners association’s hoa insurance covers structural damage to your unit.
- Loss of Use Coverage: Also called “additional living expenses” coverage, Loss of Use coverage can help pay your living expenses if you are displaced from your condominium after a covered loss. For example, if a fire destroys your living room, this coverage can help pay your hotel and food expenses while a contractor repairs your condo.
- Third Party Medical Payments: If someone falls and is injured in your condo, this coverage can help pay for medical expenses.
- Personal Liability Coverage – When someone sues you after an accident in your home, personal liability coverage can help pay your legal bills. Some condo policies combine medical payments and personal liability coverage. Liability coverages typically start at $100,000 to $300,000, but you can increase coverage to meet your needs.
- personal property coverage: If a thief steals your TV or a fire destroys your sofa, personal property coverage can replace them. Most personal property coverage pays actual cash value, which pays for the depreciated value of your belongings. Many insurers offer optional replacement cost coverage, allowing you to replace your property at current prices.
- age of the condo
- amount of coverage
- deductible amount
- neighborhood crime rates
- previous claims
- age of policy holder
- policyholder credit score
- proximity to the nearest fire station
- construction type
- Determine what your condo complex’s hoa policy covers.
- Find out how much home coverage you need to replace structural elements.
- Decide how much it will cost to replace your personal belongings.
Because coverages and exclusions may vary, please read your policy carefully.
what does condo insurance cover?
Condo insurance is like homeowners insurance with a few differences. Condominium policies generally cover losses from the same perils as a standard homeowners policy, including:
Standard condo policies include:
remember the basics
A condominium policy works like homeowners insurance, covering your personal property, protecting you against costly lawsuits, and providing limited property coverage.
cost of condo insurance
According to a 2020 study, Americans pay an average annual condo insurance premium of $625 per year, based on a policy that includes $300,000 in liability coverage and $60,000 in personal property coverage. rates can vary widely by location.
Other factors that may affect your condo insurance rates may include:
It always makes sense to purchase condo insurance. Even if you don’t have many valuable possessions, you still need liability protection. most condominium associations also require condo owners to carry insurance.
best companies for condo insurance
While there are several options for condo insurance, a few providers stand out.
best discounts: allstate
all state policyholders who are retired or at least 55 years old can save up to 25 percent on condo insurance. You can also get up to 15% off installing safety features like fire extinguishers and smoke detectors, and up to 15% off when you bundle your condo policy with auto insurance.
best optional hedges: amica mutual
Standard condo policies often don’t provide all the coverage you need. amica mutual offers optional personal property replacement cost coverage and scheduled personal property coverage to protect your most valuable possessions, such as art and jewelry. You can also add computer coverage for expensive laptops, smartphones, and tablets. amica condo insurance policyholders can also add identity fraud coverage, which can reimburse you for fraudulent credit card charges and identity restoration expenses.
best overall coverage: chubb
chubb’s standard coverage goes the extra mile by including full value coverage for additions or modifications to your condo. also includes up to $50,000 in loss assessment coverage. When homeowners associations file a HOA claim, condo owners may have to foot the bill to pay the deductible. With loss assessment coverage, your condo policy will have you covered.
best condo insurance ratings
How much condo insurance do I need?
To determine how much condo insurance you need, check what your HOA policy will cover. If the HOA policy provides little or no coverage for your unit, estimate how much it will cost to replace structural elements such as built-in appliances, flooring, kitchen cabinets, light fixtures, plumbing fixtures, and wall coverings.
Also, take an inventory of your personal belongings, including artwork, clothing, electronics, and furniture. When compiling your list, collect receipts for the items and determine how much it will cost to replace them at current prices. the sum of all your property values will determine the amount of personal property coverage you need. Most standard condo policies only pay the actual cash value of personal property and set limits on how much they will pay for certain types of items. Buying replacement cost coverage and additional coverage for your most expensive belongings can pay off if you need to file a claim.
Determining the amount of liability coverage you need is more subjective. If you like to entertain guests or have children who enjoy hosting sleepovers, you may need to increase your liability coverage.
Condo insurance works in conjunction with HOA coverage from the homeowners association. before buying a condo insurance policy:
Like homeowners insurance, purchasing condo insurance makes financial sense. The rate you’ll pay for condo insurance depends on many factors, including your location. If you live in an area prone to natural disasters, you may need to purchase additional coverage such as earthquake or flood insurance. Choosing the best condo insurance company requires research. To get started, turn to trusted sources, like the j.d. annual. power us home insurance study, which rates and ranks insurers based on customer service, claims handling, price and policy offerings. Also, investigate a vendor’s financial strength by reviewing credit ratings provided by AM Best, Standard and Poor’s, and Moody’s.