If you live in a condominium, you can likely count on your condo or homeowners association to insure the building and common areas but it won’t help you if your personal belongings are stolen or destroyed in a fire. For those and other potential disasters, you’ll need a condo insurance policy, also known as HO-6 insurance.
What is condo (HO-6) insurance?
Condo insurance covers what your HOA won’t, like repairing the inside of your unit after disasters, replacing damaged or stolen belongings and paying liability costs if guests are injured there.
You’ll often see condo insurance described as HO-6 insurance, which refers to one of several home insurance policy forms used industrywide. For example, most homeowners are insured with HO-3 policies, while renters have HO-4 policies.
The HO-6 policy form is used for both condo and co-op insurance. Although the ownership structures of condominiums and co-ops work differently, insurance policies for individual owners work pretty much the same way no matter which type of unit you have.
Is condo insurance required?
As with homeowners insurance, mortgage lenders generally require you to purchase condo insurance to protect their financial interest during the length of your loan.
Even if you’ve paid off your mortgage or purchased the property outright, you might still be on the hook for condo insurance because many HOAs require it.
What does a condo association’s insurance policy cover?
In many cases, some of your condo fees go toward a master insurance policy that covers certain disasters and liability issues. These may include:
Damage to the building’s exterior. For example, storm damage to the roof or outer siding would likely be covered.
Common areas. Your association’s master policy generally covers damage to places like the land outside the building, tennis courts, the lobby, elevators and hallways.
Injuries sustained in common areas. For instance, if a visitor is injured on an icy walkway outside the front door to the building, your HOA’s insurance will likely cover the liability costs from a lawsuit.
What does condo insurance cover?
Individual condo insurance generally covers your personal belongings, living expenses if you need to relocate after a disaster and damages if someone sues you for negligence. Depending on what your condo association’s master insurance policy includes, your individual policy may also cover your unit’s interior fixtures and appliances. Here’s a breakdown of each type of condo insurance coverage.
The personal property coverage on your HO-6 policy will replace your furniture, clothing and other personal belongings if they’re stolen or damaged by a disaster listed in the policy. These “named perils” typically include scenarios like fire, wind and hail.
Some valuables such as jewelry or artwork may be covered only up to certain limits by a standard condo policy, so you may need to purchase additional coverage if you have expensive items. (An appraisal may be required.)
Additional living expenses or loss of use
This common component of condo insurance will cover hotel bills and other expenses if fire damage or another problem covered by your policy makes your unit uninhabitable.
Liability and medical payments
If a visitor trips and falls on a staircase inside your unit, personal condo insurance can help cover his or her medical bills and your liability costs if you’re sued. Liability insurance may also cover incidents such as dog bites or damage you cause to someone else’s property. Note that not all dog breeds are covered by all insurers.
Dwelling or building property coverage
You may need to insure your unit’s interior with dwelling coverage, also known as building property coverage, depending on which kind of master policy your HOA carries. Before buying a condo policy, check with your association to see which of the following coverage types applies to its master policy.
All-inclusive or all-in coverage: With this option, your condo association’s master policy will cover all items built into your unit, including light fixtures, appliances and cabinets, plus any improvements you make to these elements. If your HOA carries this level of coverage, you likely don’t need dwelling coverage on your individual condo policy.
Single entity coverage: This is similar to all-in coverage except it doesn’t include any improvements or additions you make to your condo, only the original fixtures and appliances. If you make significant upgrades to your unit, you may want to add building property coverage to your policy.
Bare walls coverage: This includes the walls, floors and ceilings of the unit but not anything attached to them, such as carpets, light fixtures, appliances or sinks. You’ll need to seek coverage for these items under your individual condo policy. This type of coverage is why condo policies are sometimes called “walls-in insurance.”
As with personal property, your building property coverage generally applies only to disasters specifically named in the policy such as theft and fire.
» MORE: Compare condo mortgage rates
If your HOA surpasses the limits of its master policy — say, when repairing major hail damage to the building — each unit owner might need to contribute funds to make up the difference. If you have loss assessment coverage on your condo insurance, this sum may be partially or totally covered.
But the master policy could have a very large deductible and the association might split that cost among all unit owners. Alternatively, an individual unit owner might be charged the entire deductible if the damage originated in their condo.
For example, imagine your dog knocks over a candle and starts a fire that destroys part of the building’s roof. If the master policy has a $10,000 deductible, the association might hold you responsible for that amount rather than asking all the building’s owners to chip in. Loss assessment coverage may cover this type of scenario as well.
Keep in mind that this coverage typically applies only when the cause of the damage in question is covered by your policy. So if your HOA asks you to contribute to repairs from flood damage, but your own condo policy doesn’t include flood insurance, loss assessment coverage may not help you.
Which scenarios are covered, and which aren’t?
Below are some common problems that are and aren’t included under a typical condo insurance policy. You may be able to purchase additional insurance for some of the scenarios that aren’t included standard.
Usually not covered
Fire and smoke
Wind and hail
Intentional injuries to others
Damage from birds, rodents and insects
Wear and tear
Damage from underground water (such as sewer backups)
How much condo insurance do you need?
To figure out the amount of personal property coverage you need to replace all your stuff, take a home inventory using the calculator below. Consider rounding up to the nearest $10,000 to make sure you have enough coverage.
When it comes to the interior of your unit, review your HOA’s master policy before purchasing an HO-6 policy. The amount of dwelling or building property coverage you need could vary depending on whether you need to cover your appliances, cabinets, carpets and light fixtures.
Liability coverage for condo insurance generally starts at $100,000. To decide how much you need, tally up the total amount you stand to lose if someone sues you — including the value of your savings and investments, vehicles and other assets — and select enough liability coverage to cover at least that amount.
Loss assessment is included in some condo insurance policies and is an optional add-on for others. Even when it is included, the coverage limit is often fairly low (typically $1,000). You may wish to add more coverage, especially if your HOA’s master policy has a high deductible.
Condo policies can be tricky to buy because state laws and HOA bylaws differ from case to case. Talking with a licensed insurance agent is often the best way to get coverage suggestions for your situation.
How much is condo insurance?
The average condo insurance cost is $506 per year, according to a recent report from the National Association of Insurance Commissioners featuring 2018 data, the latest available. Condo insurance rates vary widely depending on where you live, how much coverage you need and the deductible you choose. See the table below for the average condo insurance premium in your state.
Average annual premium
Source: National Association of Insurance Commissioners, 2018 data
How to save on condo insurance
It’s a good idea to shop around with at least three insurance companies to find the best price for the coverage you want. Ask about discounts for bundling your condo and auto insurance with the same company, or for having safety devices like smoke detectors and deadbolt locks.
Raising your deductible is another way to save money, as long as you’re sure you’ll have enough savings to pay the higher amount if a disaster happens.