If you own a condominium, co-op, or townhouse unit, you may need to buy a condo insurance policy. Much like homeowners insurance, condo insurance can protect your dwelling, furniture, clothing, and valuables in the event of a covered peril or hazard. It can also protect your assets from liability claims and pay for temporary housing in certain circumstances.
Condo insurance, also called an HO-6 policy, protects the interior of your condominium or co-op unit and your personal belongings from damage, theft, and other covered losses. Condo insurance also provides liability coverage in the event someone is hurt while in your unit or their property is damaged and you are found legally responsible. In addition, this insurance can provide living expenses to pay for hotel stays, restaurant meals, and other bills if you are unable to live in your condo during repairs or while it’s being rebuilt. As with homeowners insurance, condominium insurance policies come with coverage limits and deductibles.
A master condo policy applies to the overall structure of the condominium or co-op building, including common areas such as the hallways, elevators, lobbies, swimming pools, and so on. It will also cover liability, including legal and medical costs, in the event a visitor is hurt while in a common area and decides to sue for damages. Your building’s management, homeowner association (HOA), or condominium association purchases a master policy, funded by maintenance fees or association dues that unit owners pay.
Depending on the insurer, a master condo policy will also provide a limited degree of coverage for your individual unit in the event of a covered peril or hazard.
- Bare walls coverage only will protect the walls, floors, and ceilings of your unit.
- Single entity coverage includes not just bare walls but also fixtures such as cabinets and sinks. It does not include upgrades that you may have made, like replacing the original carpet with hardwood floors.
- All-inclusive coverage protects like single entity coverage as well as improvements that you may have made, such as remodeling your kitchen or adding built-ins in your master closet.
You should review the master condo policy before purchasing your own condo insurance to see how much dwelling coverage you will need.
A typical HO-6 condo insurance policy includes:
Dwelling coverage
This portion of your HO-6 policy provides protection against named perils – fire and lightning, wind and hail, vandalism, etc. – that cause damage to structural components of your unit’s interior not covered by the building’s master policy. This may or may not include the walls, floors, windows, and any attached fixtures or components such as kitchen cabinets, built-in bookshelves, and bathroom fixtures. To make sure you have the right coverage for the structure of your unit, ask for a copy of the building manager’s or owner association’s master policy, which outlines what structural aspects of the unit the management or HOA is responsible for. Coverage amounts vary.
Personal property coverage
This protects your possessions: clothing, furnishings, electronics, appliances, kitchenware, jewelry, etc.. Generally, you should choose an amount of coverage that equals the value of your belongings. Depending on the policy, your insurer will determine claim amounts by one of two means:
- Actual cash value: Reimburses you for the current cash value of your item(s) minus depreciation.
- Replacement cost coverage: Reimburses you based on the current market price to replace items with those of the same or equal value.
Personal liability coverage
If someone gets hurt in your unit or you accidently damage their personal property and you are found legally responsible, this coverage will pay your legal expenses and their medical bills. Liability limits usually range from $100,000 to $500,000, depending on the insurer. If your assets are worth more than that, you may want to consider an umbrella insurance policy for additional protection.
Additional living expenses
If you cannot live in your condo while it is being repaired or rebuilt, your condo insurance policy will reimburse you for expenses such as a hotel stay and restaurant meals. This is sometimes called loss-of-use coverage.
Other coverage options
Your insurance company also may offer additional coverage that goes above and beyond the standard coverage. These include:
- Loss assessment coverage. If a claim filed on behalf of the master condo policy – repairing the building’s roof after a hailstorm, for example – exceeds the coverage limit, that excess cost may be passed on to the unit owners. Loss assessment coverage will reimburse you for your part of that expense up to your policy’s coverage limit.
- Water damage. Condo insurance doesn’t cover water damage resulting from water backups or overflows in a sewer line or drain. This additional coverage will help pay for items that are damaged or destroyed.
- Flooding or earthquakes. If you live in a high-risk area, you may need to purchase insurance coverage specifically for these events.
What Doesn’t Condo Insurance Cover?
There are some perils, hazards, and liabilities that are not covered by condo insurance. These include:
- Normal wear and tear
- Termite infestations
- Damage to common spaces
- Causing intentional injury or deliberate damage
- Flood and earthquake damage
If you financed the purchase of your condo or co-op unit and have a mortgage, your lender will require you to carry condominium insurance. Even if you own your unit outright, your HOA or condo association may mandate coverage.
Deciding how much condo insurance you need depends on a number of factors. These include:
- What does the condominium HOA master policy cover for structural damage? Does the master policy cover just the basics such as damage to the walls, windows, and doors or does it also cover the flooring, ceiling and fixtures? Knowing what the master policy covers will dictate how much dwelling coverage you need to purchase.
- How much would it cost you to replace your personal belongings? To determine how much coverage you need for your personal property, experts recommend making a detailed inventory of your home contents and tallying how much it would cost you to replace everything.
- Can you cover legal and medical expenses if someone gets hurt in your condo? If you’re found liable for an injury or property damage that happened in your condo, you may be responsible for covering legal and medical costs. Your assets —personal savings, condo equity, retirement accounts, etc.— can be used to cover those expenses. Your liability coverage should be enough to cover your assets. Coverage limits for liability typically range from $100,000 to $500,000.
- Can you pay out-of-pocket if you have to live elsewhere while your condo is repaired or rebuilt? While condo insurance will reimburse you for living expenses while you wait for your condo to become livable again, do you have the necessary funds to cover alternative housing for an extended period? Loss-of-use coverage usually maxes out at 20% of your total dwelling and personal property coverage, depending on the insurer.
To determine the cost of condo insurance, insurance companies evaluate a number of factors. These include but are not limited to the condo’s location, age and condition, security features, and claims history, among others. Generally speaking, the higher your coverage limits or lower your deductibles are, the higher your premium will be.
The average condo insurance premium varies from state to state. Nationwide, the average annual premium is $512, according to a 2022 report by the National Association of Insurance Commissioners (NAIC). Here is a state-by-state breakdown:
Average HO-6 Policy Premium By State
Source: National Association of Insurance Commissioners
| Alabama | $559 | Nebraska | $358 |
|---|---|---|---|
| Alaska | $408 | Nevada | $444 |
| Arizona | $407 | New Hampshire | $347 |
| Arkansas | $549 | New Jersey | $457 |
| California | $563 | New Mexico | $415 |
| Colorado | $431 | New York | $578 |
| Connecticut | $409 | North Carolina | $502 |
| Delaware | $445 | North Dakota | $293 |
| Florida | $997 | Ohio | $312 |
| Georgia | $516 | Oklahoma | $655 |
Source: U.S. News