Condo Insurance Vs. Homeowners Insurance: What’s The Difference?

Share This Post

Condo Insurance Vs. Homeowners Insurance: What’s The Difference?

Having the right type of insurance is important whether you own a single-family house or a condo. Condo insurance and homeowners insurance both cover problems like fire, theft and liability claims against you but they differ in other ways.

What Is the Difference Between Condo and Homeowners Insurance?

There are several major differences between homeowners insurance vs. condo insurance.

Homeowners insurance includes coverage for your dwelling, which is the physical structure of your house. If your home is damaged or destroyed by a problem covered in your policy, your insurance company will pay to repair or replace it, up to your dwelling coverage limit.

Condo owners don’t own the physical building, so condo insurance doesn’t provide dwelling coverage in the way that home insurance does. Condo insurance instead covers the interior of your unit, which may include walls, ceiling and floors.

Another difference between condo insurance vs. homeowners insurance is the price: Condo insurance is typically much cheaper.

There are many similarities between condo and home insurance. They both offer:

  • Personal property coverage, which covers your belongings.
  • Additional living expenses coverage, which reimburses you for extra costs if you need to live elsewhere temporarily after a problem covered by the policy.
  • Liability insurance, which covers accidental injuries and property damage you or household members do to others.
  • Medical payments coverage, which pays smaller medical bills of people (not your own household members) who are hurt accidentally who blame you.

Condo Insurance vs. Homeowners Insurance

Standard condo insuranceStandard home insurance
Average annual insurance cost$445$1,582
Dwelling coverageCovers damage to a condo unit’s interior caused by problems listed in the policyCovers damage to the entire structure unless caused by an exclusion in the policy
Personal property coverageCovers damage only from problems named in the policyUsually covers damage from problems named in the policy but “open perils” coverage is available
Additional living expensesYesYes
Liability insuranceYesYes
Medical paymentsYesYes
Source: Quadrant Information Services. Condo insurance rates are based on a 30-year-old female and include liability insurance of $300,000 and a $1,000 deductible. Home insurance rates are based on dwelling coverage of $350,000.

HO-3 vs. HO-6 Coverage Differences Explained

HO-3 insurance is standard home insurance and HO-6 insurance is condo insurance. These two policies provide coverage for a single-family house or condo, but there are a few differences to understand.

HO-3 insurance is the most common of the types of home insurance. It is only available for single-family homes. An HO-3 policy provides “open perils” coverage for your dwelling (house structure) and “named perils” coverage for your personal belongings. This is how they work:

  • Open perils coverage pays you for a loss unless the policy expressly excludes the problem.
  • Named perils only pays for damage from issues listed in a policy.

Types of Named Perils

The 16 named perils are:

  1. Accidental discharge or overflow of water or steam
  2. Aircraft
  3. Explosion
  4. Falling objects
  5. Fire or lightning
  6. Freezing
  7. Riots
  8. Smoke
  9. Sudden and accidental cracking, burning, bulging or tearing
  10. Sudden and accident damage caused by short circuiting
  11. Vandalism
  12. Vehicles
  13. Volcano
  14. Theft
  15. Weight of ice, snow or sleet
  16. Windstorm or hail

Common Exclusions in Open Perils Policies

HO-3 home insurance covers your dwelling on an open perils basis, but some problems are typically never covered, including:

  • Earthquakes (you may purchase earthquake insurance)
  • Floods (you can buy a separate flood insurance policy)
  • General wear and tear
  • Infestations
  • Ordinances
  • War

An HO-6 condo insurance policy covers the interior of your condo unit and your personal belongings against named perils only. If damage is caused by something that isn’t specifically covered under your policy, the insurance company won’t provide compensation.

Condo Insurance vs. Homeowners Insurance Cost

When comparing condo insurance and homeowners insurance, one of the biggest differences you may notice is the cost:

  • The average cost of condo insurance is $445 per year for $100,000 in personal property coverage.
  • The average cost of home insurance is $1,582 per year for $350,000 dwelling coverage, based on Forbes Advisor’s analysis.

Homeowners insurance premiums tend to be higher because the policy covers the entire physical structure, as well as attached structures, such as a garage or porch. There’s more risk involved for the insurance company, so rates are more expensive.

While average rates can give you a better idea of potential costs, keep in mind that condo insurance rates and home insurance costs are different for each individual. Some of the factors used to calculate your premium include:

  • Building age and size
  • Building material
  • Your history of making claims
  • Coverage limits
  • Deductible amount
  • Location
  • Proximity to a fire station

What Does My Condo Association Insurance Cover?

A condo insurance policy applies only to your individual unit. Your condo association’s master insurance policy covers shared spaces, such as elevators, lobbies, gyms and the exterior of the building. This also applies to homeowners associations.

Condo association insurance is often one of these types of coverage:

  • “All-in” master policy: This policy covers the exterior of the building and most interior fixtures, such as plumbing, built-in appliances, wiring and additions that the unit owner has made. It doesn’t provide any coverage for the personal items inside your condo unit.
  • “Bare walls” master policy: This policy covers only the exterior of the condo building and shared spaces. It doesn’t cover anything inside your unit, including permanent fixtures, like appliances, flooring and built-in cabinets.

Condo association master insurance policies cover shared spaces and guest injuries in common areas. For example, if you invite a friend over and they slip on an icy walkway and sprain an ankle, your condo association’s insurance policy should cover it.

If your condo association has a “bare walls” master policy, you might consider purchasing additional coverage or choosing higher coverage limits if your unit gets damaged. Although an “all-in” master policy provides more protection for your unit, you should still check to see what’s covered before purchasing an HO-6 condo insurance policy.

Condo insurance also typically provides loss assessment coverage. Loss assessment coverage offers funds if a condo association levies an assessment on condo owners following a master policy insurance claim. An example is if someone is injured in a common area and the condo association gets sued.

Condo insurance policies often have $1,000 in loss assessment coverage, but you can add a policy endorsement to increase the coverage amount, such as another $10,000 to $100,000.

Read the full article, click here.

More To Explore