If you own a condo, cooperative, or townhome, you may need to purchase a condo insurance policy. Like homeowners insurance, condo insurance can protect your home, furniture, clothing, and valuables in the event of a covered peril or peril. It can also protect your assets from liability claims and pay for temporary housing in certain circumstances.
Condominium insurance, also called an HO-6 policy, protects the interior of your condominium or cooperative unit and your personal belongings against damage, theft, and other covered losses. Condo insurance also provides liability coverage in the event that someone is injured while in your unit or your property is damaged and you are legally responsible. Additionally, this insurance can provide living expenses to pay for hotel stays, restaurant meals, and other bills if you are unable to live in your condo during repairs or while it is being rebuilt. As with homeowners insurance, condo insurance policies come with coverage limits and deductibles.
A master condominium policy applies to the general structure of the condominium or cooperative building, including common areas such as hallways, elevators, lobbies, pools, etc. It will also cover liability, including legal and medical costs, should a visitor be injured while in a common area and decide to sue for damages. Your building management, homeowners association (HOA), or condominium association purchases a master policy, funded by maintenance fees or association dues paid by unit owners.
Depending on the insurer, a condominium master policy will also provide a limited degree of coverage for your individual unit in the event of a covered peril or peril.
- Bare wall coverage it will only protect the walls, floors, and ceilings of your unit.
- Single Entity Coverage It includes not only bare walls, but also accessories such as cabinets and sinks. Does not include improvements you have made, such as replacing the original carpet with hardwood floors.
- All inclusive coverage protects as a single entity coverage, as well as any improvements you may have made, such as remodeling your kitchen or adding built-ins to your master closet.
You should review the master condo policy before you buy your own condo insurance to see how much homeowners coverage you’ll need.
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A typical HO-6 condo insurance policy includes:
This part of your HO-6 policy provides protection against named perils (fire and lightning, wind and hail, vandalism, etc.) that cause damage to structural components inside your unit that are not covered by the master building policy. This may or may not include the walls, floors, windows, and any attached fixtures or components, such as kitchen cabinets, built-in shelving, and bathroom fixtures. To ensure you have adequate coverage for the structure of your unit, request a copy of the master policy from the building manager or homeowners association, which outlines the structural aspects of the unit for which the management or HOA is responsible. . Coverage amounts vary.
Personal property coverage
This protects your belongings: clothes, furniture, electronics, appliances, kitchen utensils, jewelry, etc. Generally, you should choose a coverage amount that equals the value of your belongings. Depending on the policy, your insurer will determine claim amounts by one of two means:
- Effective Present Value: Reimburses you for the actual cash value of your item(s) less depreciation.
- Replacement Cost Coverage: Reimburses you based on the current market price to replace items with ones of the same or equal value.
Personal Liability Coverage
If someone is hurt in your unit or you accidentally damage your personal property and you are found legally responsible, this coverage will pay your legal fees and medical bills. Liability limits typically range from $100,000 to $500,000, depending on the insurer. If your assets are worth more than that, you may want to consider an umbrella insurance policy for additional protection.
additional living expenses
If you can’t live in your condo while it’s being repaired or rebuilt, your condo insurance policy will reimburse you for expenses such as hotel stays and restaurant meals. This is sometimes called loss of use coverage.
Other coverage options
Your insurance company may also offer additional coverage that goes beyond the standard coverage. These include:
- Loss Assessment Coverage. If a claim filed on behalf of the main condo policy (repairing the roof of the building after a hail storm, for example) exceeds the coverage limit, that excess cost can be passed on to the owners of the unit. Loss assessment coverage will reimburse you for your share of that expense up to the coverage limit of your policy.
- Water damage. Condominium insurance does not cover water damage resulting from overflow or overflow of water in a sewer or drain line. This additional coverage will help pay for damaged or destroyed items.
- Floods or earthquakes. If you live in a high-risk area, you may need to purchase specific insurance coverage for these events.
What does condo insurance not cover?
There are some hazards, perils, and liabilities that are not covered by condo insurance. These include:
- normal wear and tear
- termite infestations
- Damage to common spaces
- Causing intentional injury or deliberate damage
- Flood and earthquake damage
If you financed the purchase of your condo or cooperative unit and have a mortgage, your lender will require you to have condo insurance. Even if you own your unit outright, your HOA or condominium association may require coverage.
Deciding how much condo insurance you need depends on several factors. These include:
- What does the master condominium HOA policy cover for structural damage? Does the master policy cover just the basics, like damage to walls, windows, and doors, or does it cover the floor, ceiling, and fixtures as well? Knowing what the master policy covers will determine how much homeowners coverage you need to purchase.
- How much would it cost to replace your personal belongings? To determine how much coverage you need for your personal property, experts recommend taking a detailed inventory of your home’s contents and tallying up how much it would cost to replace everything.
- Can you cover legal and medical expenses if someone gets hurt in your condo? If you are found liable for an injury or property damage that occurred in your condo, you may be required to cover legal and medical costs. Your assets—personal savings, condominium equity, retirement accounts, etc.—can be used to cover those expenses. Your liability coverage should be enough to cover your assets. Liability coverage limits generally range from $100,000 to $500,000.
- Can you pay out of pocket if you have to live somewhere else while your condo is being repaired or rebuilt? While condo insurance will reimburse you for living expenses while you wait for your condo to become habitable again, do you have the funds to cover alternative housing for an extended period of time? Loss-of-use coverage generally tops out at 20% of your total home and personal property coverage, depending on the insurer.
To determine the cost of condo insurance, insurance companies evaluate a number of factors. These include, but are not limited to, the location, age and condition of the condo, safety features, and claim history, among others. Generally speaking, the higher your coverage limits or the lower your deductibles, the higher your premium will be.
The average premium for condo insurance varies from state to state. Nationally, the average annual premium is $512, according to a 2022 report from the National Association of Insurance Commissioners (NAIC). Here’s a state-by-state breakdown:
To learn more about homeowners insurance, visit our other guides:
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