Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective. Terms apply to offers listed on this page. Read our editorial standards. Homeowners insurance protects the dwelling , your personal belongings , and offers personal liability coverage for injuries that happen on your property.
There are several types of homeowners insurance based on the dwelling type. Condo insurance is known as an HO-6 homeowners insurance policy.
The major difference between standard homeowners insurance and condo insurance is the dwelling coverage : how it protects the structure itself. Homeowners insurance is not required by state law. However, if you have a mortgage, your lender will require homeowners insurance to protect the investment.
Additionally, a condo association's by-laws may require owners to have condo insurance. For condominiums, the building and common areas are owned and managed through the condo association. The condo association's by-laws will outline insurance coverage for the dwelling, known as the master policy.
Owners contribute to the master policy insurance coverage through assessments paid to the condo association. The exterior walls and hallways are considered common areas and would fall under your condo association's master policy. In addition to covering the dwelling , the condo association's master policy covers liability for injury that occurs in common areas. You need to check your association's by-laws to determine whether the master policy has "all-in" coverage or "bare walls" coverage.
An "all-in" master policy covers "protects external structures, common areas, liability, fixture repairs, replacements and even upgrades made by individual owners," according to Hippo. A "bare walls" master policy covers "only external structures and common areas.
Data from Hippo Insurance. Although the condo association's master policy covers the building and common areas, your assessment payments do not cover the contents of your unit, injuries that occur in your unit, or damage to your unit.
Condo insurance is referred to as "walls-in" coverage because it covers everything inside your walls, whether that's your property, your liability, or damage inside your unit. Plus, condo and co-op owners get a specific type of coverage called loss of assessment, which kicks in to cover any additional costs that may be requested should the condo association's own coverage fall short.
If the association's coverage isn't enough should there be an accident or event, the association will ask for additional payment from each member, and loss of assessment coverage helps condo owners cover those payments. If you live in a condo or co-op, the building and common areas are covered by the condo or co-op association's master policy, which condo owners contribute via condo assessments. Special form HO-3 is the most common type of homeowners insurance because it covers the house dwelling , personal property, and personal liability coverage.
Condo insurance is different from your standard homeowners insurance because dwelling coverage is covered by the condo association's master policy. In this respect, condo insurance resembles renters insurance because neither condo owners nor renters own the dwelling.
Townhomes can be HO-3 standard homeowners or HO-6 condo insurance depending on whether or not there is a homeowners association. Homes located in disaster-prone areas — flood zones, hurricanes, tornadoes, wildfires, mudslides, hail, and earthquakes — will have increased premiums because these types of events are not included in basic coverage and will need to be add-on riders.
Note that the cheapest price is probably not the way to go if that means a company isn't responsive when you file a claim. Focus on customer service, complaints, and the reputation of the insurance provider. Data from the NAIC. If you currently have condo insurance, review your policy coverage yearly, especially if your condo association has changed by-laws regarding insurance coverage.
If your condo insurance company hasn't provided the level of service you expected, maybe it is time for you to select a new provider. Remember that a cheap price doesn't mean good customer service. The average cost for condo insurance will vary based on the state where you live and whether you are urban or rural. Focus on customer satisfaction rankings, like those from J. Power, and comparison shop. This is especially important for those living in disaster-prone areas, when good service can make all the difference.
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The master policy usually insures common areas such as a picnic area and outside walls, but it may insure more. Figure out what type of policy your HOA has before you start shopping, as this will tell you what type of policy you need to get.
Most HOAs usually opt for bare walls-in because it is cheaper. In which case, you will want to go through the following steps. If you were to add up the value of all of your possessions, how much protection would you need?
How much do you own in jewelry? How big is your wardrobe? What did you pay for your couch? You need a personal property limit aka dwelling coverage high enough to replace all of your possessions in the event of a total loss. This is easier said than done, but start by asking your HOA for further guidance. What do other unit owners purchase? Your insurance company will calculate what is called replacement cost value.
In most cases an agent will take care of this for you. To do this, he or she will look at things like:. Another option is to contact an architect or contractor and get a quote. Lastly, if you have a mortgage, your lender will likely require you to have a set amount of coverage. In this case, the easiest thing to do is call them and ask. Not all condo policies include loss assessment coverage, but even if yours does, it probably won't cover every special assessment.
But if a fire destroyed the roof, your loss assessment coverage would probably pay out because fire is a disaster most insurance policies cover. An HO-3 policy — the most common homeowners insurance policy — insures single-family homes with coverage for the entire building, plus any free-standing structures like sheds or fences. What is condo HO-6 insurance? Is condo insurance required? What does condo insurance cover? Optional condo insurance coverage.
How much condo insurance do you need? How much is condo insurance? How to save on condo insurance. Show More. Key takeaways. Personal property. Nerdy tip: There are two types of personal property coverage.
Additional living expenses or loss of use. Liability and medical payments. Dwelling or building property coverage. Loss assessment. Usually covered. Usually not covered. Fire and smoke. Wind and hail. Intentional injuries to others. Nuclear hazards. Wear and tear. Burst pipe. Replacement cost coverage for personal property. Like a home, typically, your condominium is your most valuable possession, as are your often priceless personal belongings. Like standard homeowners insurance , condominium insurance can protect you from financial hardship if your condo and its contents are damaged.
Additionally, condominium insurance protects from claims by others who may be injured in your condo. Purchasing a condo insurance policy is a relatively modest investment that can help complete your overall insurance plan and provide affordable and abundant peace of mind. Condo insurance, or an HO-6 policy, helps cover repair costs and financial losses arising from damages to the condo or claims against the owner.
The insurance industry refers to condo insurance as an HO-6 policy. There are several types of HOA insurance policies that provide different levels of protection for unit owners. As such, an HO-3 policy covers damage to the entire home, including internal and external structures of the home as well as personal belongings and owner liability. The exterior elements of the building, like the roof, are covered by the HOA master policy. HO-6 policies cover the same types of perils as homeowners policies , such as fire, windstorms, hail, explosions and theft.
Typically, condo insurance policies include four or five types of coverage:. It is important to know whether your policy covers the actual cash value or replacement cost of the items damaged by a covered peril. Typically a condo policy provides coverage for the replacement cost of damaged items and the cost to repair damaged interior structure elements or offers the option to acquire this level of protection.
Replacement cost coverage is the broader protection as it pays the entire amount necessary to replace items. On the other hand, actual cash value only pays the depreciated value since the original purchase.
While most condo insurance policies include the coverage listed above, there are typically specific exclusions from standard coverage. Although separate policies and riders can often be purchased to offer the necessary coverage, standard condo insurance policies typically exclude:. 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.
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. 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 usually requires it. 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 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.
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