Whether you need condo insurance or homeowners insurance depends on the type of home you live in. Generally, if you’re in a single-family residence, you need homeowners insurance. If you’re in a condo, cooperative unit, or a certain type of townhouse, you need condo insurance. Your lender or real estate agent can tell you which policy you’re required to purchase.
What’s the difference between condo insurance and homeowners insurance?
Condo insurance and homeowners insurance protect many of the same things, including your belongings, liability, and temporary living expenses after a covered claim. But the biggest difference is what part of the building you’re responsible for insuring.
Home insurance generally covers the entire structure of your property (from the roof down to the foundation).
Condo insurance generally covers the inside of your unit only, and the condo association insures the building itself through a master policy.
For example, let’s say a fire damages a single-family home. Your home insurance policy may help pay to rebuild the roof, exterior walls, kitchen, and other parts of the structure, as well as replace damaged belongings inside.
But in a condothe condo association’s master policy could cover damage to the building itself, while your individual condo owner’s policy would be responsible for your personal belongings and any damage inside your unit.
Read more: Types of homeowners insurance
What homeowners insurance covers
Most homeowners carry what’s known as an HO-3 policy, which is the most common type of homeowners insurance. (In some cases, you may carry an HO-5 policy.)
A standard homeowners insurance policy typically covers:
Dwelling coverage for the structure of your home
Other structures coverage for things like detached garages, sheds, and fences
Personal property coverage for your belongings
Liability coverage if someone is injured on your property
Loss of use coverage if you need to live elsewhere during repairs
Medical payments coverage for minor guest injuries
Home insurance generally has higher dwelling coverage limits than condo insurance because you’re responsible for the entire structure of your property (as opposed to mainly the inside).
Read more: How to read a homeowners insurance policy
What condo insurance covers
Condo owners typically carry what’s known as an HO-6 policy. Unlike homeowners insurance, condo insurance generally protects what’s inside your unit rather than the entire building.
A standard condo insurance policy typically includes:
Loss assessment coverage is usually unique to condo owners. It may help pay your share of certain damage-related expenses if the condo association assesses costs across unit owners after a covered loss. For example, if the association determines that roof damage from a storm exceeds the master policy’s coverage limits, loss assessment coverage could help cover that difference.
HO-6 vs. HO-3: Key differences
Condo insurance and homeowners insurance share many of the same coverages, but they’re designed for different types of properties.
Feature | HO-6: Condo Insurance | HO-3: Homeowners Insurance |
|---|---|---|
Why the condo association’s master policy matters
A homeowner association’s master policy generally covers the building itself and common areas like hallways, elevators, clubhouses, pools, and roofs. But what it covers inside individual units varies from one community to another.
There are three common types of master policies:
Bare walls coverage: Covers the building itself, but little to nothing inside your unit. In this case, you may need enough condo insurance to cover flooring, cabinets, fixtures, appliances, and other interior features.
Single entity coverage (all-in, excluding improvements or betterments): Covers the building plus some standard fixtures inside units, such as cabinetry, flooring, and built-in features. However, improvements and renovations you’ve made may not be covered.
All-in coverage: Provides the broadest protection and may cover the building, standard fixtures, and many improvements inside units.
For example, let’s say you renovate your kitchen and install custom cabinets and stone countertops. If a fire damages the unit, whether those upgrades are covered could depend on the type of master policy your association carries.
Expert tip: The best way to know what your association will cover is to request a copy of the master policy before you shop for your own policy. That way, you can avoid paying for coverage you don’t need or discovering a coverage gap after filing a claim.
Condo insurance vs. homeowners insurance cost
Condo insurance costs around $490 per year or $40 per month. Meanwhile, home insurance costs around $2,543 per year or $212 per month for $300,000 in dwelling coverage and a $1,000 deductible.
Condo insurance is usually cheaper than homeowners insurance because you’re insuring a smaller portion of the property.
Your premium can also be affected by factors like:
Read more: How to pay less for homeowners insurance
How to choose the right policy
The best way to know if condo or homeowners insurance is right for you is to ask your real estate agent or lender, or review your home purchase agreement to see how your property is categorized. Here are a couple of things to keep in mind:
If your home is categorized as a condo (even if it’s technically a townhome or other structure), you will likely need an HO-6 condo policy.
If it’s classified as a single-family residence, then you most likely need an HO-3 standard home insurance policy.
From there, your biggest challenge will be determining how much coverage you need to buy.
For homeowners, that usually means making sure you have enough dwelling coverage to rebuild your home if it’s destroyed by a covered loss.
For condo owners, the first step is reviewing your condo association’s master policy. Understanding whether the association carries a bare walls, single entity, or all-in policy can help you determine how much interior dwelling coverage you need.
No matter which type of policy you choose, it’s worth reviewing:
Your dwelling coverage limits
Your personal property coverage limits
Your liability coverage amount
Your deductible
Any endorsements or optional coverages you may need
Read more: How to shop for homeowners insurance
Condo insurance vs. homeowners insurance FAQs
Is condo insurance required?
Condo insurance isn’t required by law, but your mortgage lender will likely require it if you’re financing your unit. Even if you own your condo outright, condo insurance can help protect your belongings, liability exposure, and parts of the unit that aren’t covered by the condo association’s master policy. It’s almost always worth carrying.
Does condo insurance cover the roof?
In most condo communities, the roof is covered by the condo association’s master policy because it’s considered part of the building structure or a common area. However, coverage can vary depending on your association’s master policy, so always review this document or ask the association to know exactly what’s covered.
What’s the difference between a master policy and condo insurance?
A master policy is the insurance policy carried by your condo association. It generally covers the building itself and shared areas like hallways, elevators, pools, and clubhouses. Condo insurance is the policy you purchase as the individual unit owner. It helps cover your personal belongings, liability, additional living expenses after a covered claim, and certain parts of your unit’s interior.