Owning a condo splits insurance responsibility between you and your association. The association insures the building and shared spaces through a master policy. Your own condo policy picks up where that coverage stops, covering the interior of the unit, your belongings and your personal liability.
This guide explains what condo insurance covers, how it fits with the master policy and how to choose coverage limits.
KEY TAKEAWAYS
- Condo insurance, also called an HO-6 policy, covers a unit’s interior, personal belongings, liability and temporary living costs after a covered loss.
- The association’s master policy determines where your coverage begins, so review it first when setting limits.
- Loss assessment coverage helps pay your share when a building claim goes past the master policy’s limits or deductible.
Flood coverage requires a separate policy.
What is condo insurance?
Condo insurance is a homeowners policy designed for people who own a unit in a condominium or co-op building. The insurance industry calls it an HO-6 form. It covers the parts of ownership the association’s policy leaves to you, which usually include interior finishes, fixtures, personal property and liability for injuries inside the unit.
Most mortgage lenders require an HO-6 policy on a financed condo. Many associations also require one in their bylaws, including for owners with no mortgage.
How does condo insurance work with the master policy?
The association buys a master policy for the building’s structure and common areas, such as the roof, exterior walls, hallways, elevators, parking areas and pool. Association dues fund the premium. The master policy also covers liability for injuries in those shared spaces.
How much of each unit the master policy covers depends on its type. Most fall into one of three categories, though exact definitions vary by policy and bylaws:
| Master policy type | What the association covers inside units | What the owner insures |
|---|---|---|
| Bare walls | The unit’s shell and structure | Drywall, flooring, cabinets, fixtures, upgrades and belongings |
| Single entity | Original fixtures and finishes as built | Upgrades and improvements, plus belongings |
| All-in | Fixtures, finishes and most owner improvements | Personal property and liability |
Ask your association or property manager for the master policy declarations page and the insurance section of the bylaws. Those two documents show where the association’s coverage ends and yours begins. American Heritage Insurance Group also insures condominium associations, so our agents can walk you through the master policy and match your HO-6 limits to it.
What does condo insurance cover?
The unit’s interior
Dwelling coverage pays to repair the parts of the unit that fall to you under the master policy, such as drywall, flooring, cabinets, built-ins and plumbing and electrical fixtures. It also covers improvements you’ve made, like a remodeled kitchen or new hardwood floors.
Personal property
This covers furniture, clothing, electronics, kitchenware and other belongings, including items stored elsewhere. Policies pay claims in one of two ways. Replacement cost coverage pays the price of a comparable new item. Actual cash value pays the item’s depreciated value. Replacement cost carries a higher premium and pays more after a claim.
Personal liability
Liability coverage pays legal defense and damages if someone is hurt in your unit or you accidentally damage another person’s property. In a condo, that often means water: an overflowing bathtub that leaks into the unit below is a common liability claim. Medical payments coverage handles smaller injury bills for guests without a lawsuit.
Loss of use
If a covered loss makes the unit unlivable, loss of use coverage (also called additional living expenses) pays for a hotel, meals and other extra costs during repairs.
Which coverage options should condo owners ask about?
- Loss assessment: When a building loss exceeds the master policy’s limit, the association can divide the extra cost among unit owners. The same applies to the master policy deductible. Loss assessment coverage pays your share up to its limit, so set that limit to at least your portion of the master deductible.
- Water backup: Standard HO-6 policies exclude water that backs up through sewers and drains. An endorsement adds that coverage.
- Flood: Flood damage requires a separate policy through the National Flood Insurance Program or a private carrier.
- Scheduled personal property: Jewelry, art and collectibles often have low payout caps on a standard policy. Scheduling them separately insures each item for its full value.
- Umbrella: A personal umbrella policy adds liability protection above your HO-6 limits.
What does a standard condo policy exclude?
A standard HO-6 policy excludes flood, earthquake, sewer backup (without an endorsement), wear and tear, pest damage and intentional damage. Common areas fall under the association’s master policy. Most of these gaps can be filled with an endorsement or a separate policy, and your agent can tell you which ones fit your building and location.
How much condo insurance do you need?
- Dwelling coverage: Start with the master policy type. Then estimate what it would cost to rebuild the interior items the association leaves to you, including any upgrades.
- Personal property: A room-by-room home inventory, with photos, gives you a realistic replacement total.
- Liability: Match your liability limit to your assets. If your savings, home equity and retirement accounts exceed the policy limit, an umbrella policy covers the difference.
- Loss assessment: Set this to at least your share of the master policy deductible.
- Requirements: Check your mortgage terms and bylaws for minimum coverage amounts.
What affects the cost of condo insurance?
Condo policies usually cost less than a standard homeowners policy because the association insures the building’s structure. Your premium depends on location, the building’s age and construction, your coverage limits and deductible, safety features like smoke detectors and sprinklers, and your claims history. Bundling condo and auto coverage with one carrier often lowers the total.
Rates for the same unit can vary widely from one carrier to the next. As an independent agency, we compare quotes from over 20 carriers to find the right mix of coverage and price.
Frequently asked questions
Do I need condo insurance if my association has a master policy?
In most cases, yes. The master policy covers the building and common areas. Your belongings, your liability and, depending on the policy type, your unit’s interior finishes all need an HO-6 policy.
Does condo insurance cover a townhouse?
It depends on what you own. If the association owns and insures the exterior and roof, an HO-6 policy usually fits. If you own the structure and the land beneath it, you’ll likely need a standard homeowners policy. Your deed and bylaws settle the question.
Does condo insurance cover water damage from the unit above?
Sudden, accidental leaks, such as a burst pipe, are generally covered for damage inside your unit, subject to your deductible. Depending on the cause and your bylaws, the neighbor’s policy or the master policy may also respond. Flood and sewer backup need separate coverage.
What is the difference between condo and renters insurance?
Renters insurance (an HO-4 policy) covers belongings and liability for tenants. Condo insurance adds coverage for the unit’s interior and improvements, which owners are responsible for.
Can I use condo insurance if I rent out my unit?
A standard HO-6 policy is written for owner-occupied units. If you rent yours out, ask about a rental endorsement or a landlord policy.
Talk with an American Heritage agent about condo coverage
Our agents in Montgomery and Springfield help condo owners across Greater Cincinnati, Northern Kentucky, southeastern Indiana and the Springfield/Dayton area choose coverage that fits their building’s master policy.