Types of Insurance / Homeowners Insurance / How to Buy Insurance for your Condo

How to buy Condo Insurance

Buying insurance for your condo is typically less expensive than purchasing a policy for a single-family house, but it's also more confusing. To optimize your insurance, make sure you know what you're buying and how much coverage you really need.

When you purchase a condominium unit, you don’t have to worry about some of the costs associated with single family homes - such as replacing your roof or land maintenance. Condo associations cover costs for an entire building with a master insurance policy, except that master policy won’t protect your stuff or the renovations you make to your home. Personal condo insurance, also called an HO-6 policy, protects your belongings, assets, and makes sure your home can be rebuilt completely after a major disaster. Your homeowners association (HOA) and mortgage lender could also require that you purchase condo insurance.

Condo association insurance doesn't protect you or your home.

You need a personal condo policy to rebuild your own home, protect your belongings, and shield you from lawsuits.

Calculate your condo's insurance needs carefully.

How much condo insurance you need depends on how much your HOA policy covers, your home's finishes, and other factors.

Save on condo insurance by customizing your policy

Simple changes, like choosing the right endorsement/riders or picking a higher deductible, can significantly lower your premiums.

What is condo insurance?

Condo insurance or an HO-6 insurance policy is a type of homeowners insurance. However, it typically costs less than homeowners insurance for a single family home because it does not insure the cost to rebuild the entire condominium structure.  

Many components of condo insurance are similar to a standard homeowners insurance policy, but there are a few differences. Condo policies don’t cover “Other structures” like detached garages or sheds because these are usually community property in a condominium building. Homeowners insurance also requires much higher Coverage A, to cover the estimated cost to rebuild your entire home, while condo policies only cover inside walls, floors, and sometimes even less.

Key components of condo insurance - Dwelling coverage, or Coverage A , pays out the cost to rebuild your home if it’s damaged by a covered peril like fire or hail. Condo policies typically require only a minimum of $5,000 in Coverage A because they don’t protect the entire condo structure. Depending on your HOA’s insurance, you could only be responsible for fixtures, appliances, and minor wall treatments. 

• Personal property coverage, or Coverage B, covers your personal belongings (with some exceptions). **** Most of us don’t realize how much we own until we have to move it or replace it all at once. Even a smaller apartment can contain thousands of dollars worth of furniture, electronics, kitchen equipment, and clothing. With Coverage B, you can replace these personal items if they are damaged, destroyed, or even stolen. 
• Loss of use, also called Coverage D, or additional living expenses (ALE), protects you if you ever need to vacate your home due to a covered loss. For example, if a fire spreads from your neighbor’s condo to yours, loss of use coverage can pay for your hotel room, food, and even increased transportation costs while your home is treated for smoke damage.
• Liability coverage, or Coverage E, protects you from being liable for accidental harm that can happen in your home, or as a result of you or your family members’ actions. This includes slip-and-falls in your home, property damage to other units caused by accidental fires, and even an injury your child causes if they hit someone with a football in the park. While your condo’s HOA policy will also include liability insurance, this protects your HOA from lawsuits – not you or your family.

What does condo insurance actually cover

Your condo policy will detail the “named perils” covered by your personal property and dwelling limits. These usually include, but aren’t limited to: fire, lightning, smoke, theft, vandalism, and hail. To check what’s covered, review your perils with an insurance agent or broker, especially if you need to add additional protections.

What doesn't condo insurance cover

No insurance can provide protection against every single scenario, but there are some exceptions for every condo policy. Condo insurance does not cover floods, landslides, earthquakes, wear and tear, sewer backup, and excess valuables. Insurance companies allow you to add coverage for some of these through a rider or endorsement. You can also purchase standalone policies to protect you against flood or cover expensive valuables.

How much condo insurance do I need?

**** Condo insurance is usually less expensive than homeowners because it provides less dwelling protection, but figuring out how much you need can be tricky. A few factors determine how much insurance you need; how much your HOA covers, the value of what’s inside your condo, and construction costs in your area. There are common methods for calculating condo insurance quickly, like the 20% method or the square foot method.

Coverage Cat recommends first evaluating the factors below to ensure you’re not over or underinsuring your condo. 

Your HOA or condo association master policy

Your HOA fees go towards many services, like maintenance, repairs, and insurance. A master insurance policy, which condos are required to maintain, covers your building’s structure and any shared common areas. Master policies differ in how they cover individual units and can provide All-in, Single Entity, or Walls-in coverage.   - All-in policies, sometimes called all-inclusive, cover everything inside a home that you wouldn’t take with you if you moved, that includes drywall, fixtures, installations, and sometimes even appliances.  

• Single entity policies, like all-in, cover everything built into your unit but only in its original state. Renovations and additions aren’t covered.  
• Walls-in policies, sometimes called bare walls or studs-out, cover your unit’s exterior until you get to your interior wall. A walls-in policy requires your personal condo policy to cover replacing drywall, insulation, fixtures, countertops, and appliances. 

While your insurance agent can advise you on how much insurance to buy, reviewing your condo policy ensures that you’re not buying too much coverage or not enough. 

The value of your condo

You can imagine that your condo association policy ends somewhere inside your condo's walls. That could include some parts of the walls themselves, but at a minimum includes your personal belongings, your personal assets, and at least some of the condo property. To determine how much coverage you need, consider the factors below.

**** - The level of finishes in your home. If you have a single-entity or walls-in policy, consider how much your fixtures, countertops, or additions are worth. If you completed significant renovations, or chose custom cabinets and granite countertops, your coverage should be higher than if you purchased builder’s grade materials. 

• Property location. Some places just cost more to live in, and construction labor and materials usually reflect that higher cost. In a more expensive city, such as New York or San Francisco, the cost to install those new light fixtures or drywall could be significantly higher and needs to be factored into your dwelling coverage.
• The value of your personal property. The value of your personal belongings (furniture, electronics, kitchen equipment, and clothing) can quickly add up, and none of it is covered by any type of master condo policy. Your needs can also vary drastically if you’re a minimalist or own high-end furniture and products.
• Your personal assets. As you acquire wealth, it becomes even more important to protect it from lawsuits because you have more to lose. A personal injury in your home, damage you cause to another unit, and accidental injuries caused by your family members can all balloon in cost if you're hit with a lawsuit. To protect yourself effectively, we suggest getting personal liability that matches your assets, and buying umbrella insurance when your net worth rises above $1 million.

How to lower the cost of your condo insurance - Personalize your coverage limits - Condo insurance is much more dependent on your building’s policies and your personal needs than other forms of homeowners insurance. Some condo owners can purchase the absolute minimum in Coverage A, while others can save more after a disaster if they purchase significantly more. Carefully review your condo’s master policy, and take stock of what you’ll have to replace and how much you’ve spent on additions or upgrades to determine an appropriate level of coverage.      

• Raise your deductibles - Deductibles for condo insurance can start as low as $100 and are the amount you pay out-of-pocket for any covered claim. Purchasing higher deductibles can save you on premiums and discourages using your insurance for small claims. Paying more out of pocket can save you money long-term because claims increase your rates for up to seven years - and too many claims can get you dropped by your insurance company. 
• Be selective with riders and endorsements . Insurance companies offer many additional coverages that can add up to a significantly higher premium. Before you purchase that identity theft or appliance coverage, consider what protections you already have through credit cards or manufacturer warranties. You should also consider how much you’ll receive in benefits versus premium cost, and avoid coverages with low payouts if you can afford to pay for them through savings. 

Can you buy condo insurance for a townhouse?

Whether a townhouse is covered by condo insurance depends on the ownership structure of your townhouse community. If you own the exterior of your townhouse as well as the interior, you’ll need a traditional homeowners insurance policy. Condo insurance will only cover interior damage and can severely limit your protection unless your HOA specifically covers your home’s exterior. To determine whether you need homeowners or condo insurance for your townhouse, carefully review your HOA’s master policy and determine your townhouse community’s ownership structure. 

Frequently Asked Questions

How do I buy condo insurance?

Most companies that offer homeowners insurance also offer condo insurance. To purchase a condo policy, you can shop around with most major homeowners insurance companies or contact an independent agent like Coverage Cat to shop around for you.

How much does condo insurance cost?

Condo insurance costs vary significantly by state, coverage, and a variety of other factors. Some companies estimate that the average condo owner paid from $455 - $511 per year in 2023.

Who offers the best condo insurance?

The best condo insurance company for you depends on a variety of factors. To find your best policy, it's important to shop around and compare offers and coverages, especially if you have multiple policies. Contact an insurance agent or broker, like Coverage Cat, to get a variety of quotes and explain your options.