UPDATED: Mar 26, 2020
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Congratulations, you’ve purchased a condo! Now it’s time to protect your investment and yourself with condo insurance.
Not sure where to start? Don’t worry, we’ll explain everything you need to know about condo insurance. After all, condo insurance isn’t exactly like homeowners insurance. Condo insurance policies have different guidelines than homeowner’s insurance, but there are ways they’re similar as well. So let’s take a look at what condo insurance is, why you need it, and how much this type of coverage typically costs.
What is condo insurance?
First of all, let’s define condo insurance. This type of insurance may not be as familiar as homeowner’s or renter’s insurance. But it works very similarly to other types of insurance.
Condo insurance, also known as an HO-6 insurance policy, protects everything inside your condominium, including interior and exterior walls, fixtures, etc. In this, it is very similar to renters insurance or regular HO-3 home insurance.
Here’s a helpful summary of what a typical condo insurance policy provides coverage for:
- Personal liability – any expenses that come from lawsuits made against you or while on your property are covered.
- Personal property – this covers things like your furniture, appliances, electronics and other things that are not permanently fixed to the condo unit.
- Building property – this protects the unit itself. Everything from the walls and floors to the fixtures and cabinets will be covered in this section.
- Loss of use – this covers the costs associated with finding other housing or transportation if your condo is uninhabitable after something like a fire.
- Loss assessment – this covers your portion of any losses that the condo association shares out among all other owners.
Your condo association will be responsible for ensuring the exterior spaces of the condo community. This will include things like the parking lot, overhead canopies, etc. Condo insurance only covers your specific unit.
Do I need condo insurance if I’m part of an HOA?
Most condos come with a homeowner’s organization or HOA (homeowners association). When you’re part of an HOA, you pay a monthly or yearly fee to this organization. The HOA is set up to protect you and work for all of the residents in the community.
However, HOAs are not the same thing as condo insurance. They have a few specific differences:
More Specifics on HOAs:
- According to the realtors at Northern Virginia Home Pro, who specializes in condos, HOAs are responsible for the common areas of a condo community.
- HOAs maintain community pools and lobbies, contract your landscaping service, and other things you’re not directly responsible for, including the roof of the whole complex.
- The HOA is also responsible for taking care of other issues. They arbitrate disputes and decide on any changes to the common space.
Where Condo Insurance Comes into Play:
- Condo insurance goes beyond the HOA and protects the inside of your individual unit.
- Condo insurance is there for emergencies; the HOA is not. Condo insurance can recoup damages inside your unit. It can also help you replace stolen belongings or cover your liability if there is an injury in your home.
- Sometimes external damage to the condo community may exceed the HOA’s budget. In this case, your condo insurance can help make up the differences. However, in this instance, every resident will be expected to chip in.
Do I really need condo insurance?
Condos are a unique type of living situation. Most condos are set up like apartment buildings, but you completely own your individual unit.
Because of the differences between renting an apartment, owning a single-family home, and owning a condo, each situation requires its own type of insurance.
Think about it as if it were a single-family house. If a fire burned your entire house to the ground, you’d be thankful for your homeowner’s insurance, right? Well, what if you have a condo and the fire not only burns your entire unit, but also the ones above and next to you? Then you’ll be responsible for the damages to your unit and the others!
If you plan on purchasing a condo, ultimately you will need condo insurance.
How much does condo insurance cost?
Your condo insurance costs will vary like all other kinds of insurance based on the amount of coverage you choose. Typically, condo insurance will cost between $100-$500 per year for base plans. If you have a lot of highly valuable items (like jewelry or an art collection) or if you need more liability protection, then the yearly cost of your condo insurance will probably increase.
Where you live will also affect the price of your condo insurance. Some major cities like Miami, Chicago, New York, or Los Angeles will have higher condo insurance than smaller cities.
Plans in major cities may cost well over $1,000 per year.
Most condo insurance policies include at least $100,000 in liability coverage. If you need to cover more than that amount, you can always purchase more.
What are the different kinds of condo insurance coverage?
There are three main types of coverage with condo insurance: inclusive, a special entity, and bare walls bare studs.
The one you choose will depend on how much coverage you need.
- Inclusive – all in inclusive condo insurance covers everything in your individual unit. This includes the exterior and interior surfaces, fixtures, installations, etc. You will still be required to purchase personal property insurance to protect your belongings.
- Special Entity – special entity condo insurance provides coverage for the unit’s structure. It does not protect or aid with improvements made to the structure or additions. You will still need personal property insurance as well.
- Bare Walls Bare Studs – this insurance covers the least of any type of condo insurance, but it is also the most affordable. This type of condo insurance only covers the unit’s structure. If you want protection for the interior fixtures and other contents, you will need other types of insurance.
What exactly does condo insurance cover?
Clearly, what condo insurance covers will vary by type. No matter the type you choose, you will still likely need personal property insurance as well. Because it is the most inclusive, let’s look at what an all-inclusive condo insurance covers. The other two types will cover less than is listed here.
All-inclusive condo insurance will protect your unit from fire and smoke, explosions, wind and hail damage, theft, vandalism, lightning, and a pipe that bursts and floods your unit.
It will also have liability insurance in case someone else gets unintentionally injured in your condo. Earthquakes, floods, nuclear disasters, and other damages are not covered by condo insurance. These will require separate policies.
Make sure to purchase your condo insurance from one of the best insurance providers. They will be able to give you the specifics of your individual plan and answer any questions you may have about coverage.
Enjoy Your Condo and the Security of Insurance
A condo can be a great alternative to traditional home ownership. Condos allow you to own your own property while also providing the amenities and conveniences of apartment living. That’s why condo popularity has grown in recent years, especially with the Millennial generation of homeowners.
Once you’ve found your dream condo, you need to protect it. That’s where condo insurance comes into focus. Make sure to do your research and read reviews from trusted industry experts before deciding on the right provider for you.