Condo Insurance Overview

Many people consider a condo as something between a house and an apartment. If you’ve recently purchased a condo, you may wonder if you need homeowners insurance. The answer is yes, but you will need a special type of coverage. 

Do You Need Insurance for a Condo?  
If you take out a mortgage for your condo, you probably need insurance; most lenders require it. If you have a mortgage, the insurance protects the interest of the bank if something happens to the condo. Therefore, unless you’re able to buy the condo outright, insurance is likely mandatory.

However, you cannot simply buy a home insurance policy for a condo. There is condo insurance, which is like homeowners’ insurance (but for condos). There is also the matter of joining a condominium association. You probably only need to purchase condo insurance to cover your unit. You will then pay monthly fees to the Condominium Association. The association handles buying an insurance policy to cover the pool, the hallways and other common areas.

What Is an Individual Condo Insurance Policy?  
An individual condo policy (unit owner’s policy) is what you need. You will probably have to buy an individual condo insurance policy if you take out a mortgage for a condo unit. The unit owner’s policy will provide you with liability protection in the event of an accident in your condo. It will also cover your personal belongings and furnishings in the condo that are your responsibility for upkeep.

What is a Master Condo Insurance Policy?  
The master condo insurance policy is what the condominium association buys. The association will cover the cost of a premium by having condo unit owners pay association dues or maintenance fees. Usually, all residents must join the association. This policy covers property damage coverage for the hallways, the roof, the elevators, the recreation rooms, the stairways, the pool, and other common areas. While these are areas you use, they don’t belong to you personally. The Master Condo insurance policy also covers general liability for the association.

Before you buy an individual condo insurance policy, check the master condo policy to determine what is already covered. In particular, you want to check that the master condo policy covers wind or flood damage. Otherwise, you will need to purchase a unit’s owner policy that covers those risk areas.

What Does Condo Insurance Cover? 
If you live in a condo, your insurance will be slightly different than if you lived in a home. It is more closely related to renters insurance, since condo insurance only covers the interior of the condo and your personal belongings.

Coverage Under Condo Insurance

Condo insurance covers three main areas:

Unlike a home insurance policy, condo insurance does not cover the outside of the condo or its property. Instead, the owner of the condo should provide coverage for damages to the physical building itself.

The condo association should have a master condo insurance policy. This policy covers damages to the building in either an all-in or walls-in policy. An all-in policy covers items inside a building, such as fixtures, flooring and appliances. A walls-in policy does not cover these inside fixtures.

This doesn’t mean the condo owner can’t seek compensation, however. For example, say you accidentally start a fire and damage several cabinets in your condo’s kitchen. This should be covered under your landlord’s insurance, but they may still seek compensation from you for the price of their deductible and having to file a claim.

What Does Condo Insurance Not Cover? 
As with other policies, condo renters insurance doesn’t cover everything. Flood damage and earthquakes are often excluded from these policies. There is also limited coverage for expensive items such as electronics, jewelry, art and furs. You can purchase additional policy floaters to cover these items, however.

How Much is Renters Insurance for a Condo? 
In general, renters insurance is around $15 a month. This varies depending on your location, your claims history, your credit score and other factors. Be sure to check with your condominium association to determine what type of policy they have and what is covered under their policy. While condo insurance isn’t required legally, many landlords and associations will require tenants to carry their own personal condo insurance policy to protect their belongings and others.