What does condo insurance cover?

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Condo insurance provides personal property coverage, liability coverage, and loss of use coverage. It also covers any portion of the condo structure for which you are responsible inside the unit, usually called building property coverage. Unlike standard homeowners, it doesn’t cover the entire structure.

There are a few types of HO-6 condo insurance policy available based on what your HOA master policy covers. What your condo insurance policy needs to cover will depend on what the HOA policy doesn’t.

Below, we’ll take a look at what condo insurance covers and what you need to know about the types of policies.

Key Takeaways

Condo insurance covers personal property, building property liability and loss of use.
There are several types of condo insurance policy with varying amounts of coverage for the unit itself; how much you need depends on what your HOA master policy covers
Personal property is usually the largest coverage amount on a condo policy, unlike homeowners insurance which needs coverage for the entire structure.

What condo insurance covers

A condo insurance policy covers all of your personal property and any portion of the unit’s structure for which you are responsible, often from the walls in. It also provides liability coverage and guest medical.

“Condo insurance is intended to cover nearly everything inside the walls of your unit. Your mortgage lender and your condo association bylaws will likely require that you carry individual condo insurance separate from a master condo association policy because your financial ability to repair your condo after a disaster protects the overall value of your unit for you and the condo association,” says Mark Friedlander, director of corporate communications for the Insurance Information Institute.

But unlike a homeowners insurance policy, an individual condo policy doesn’t typically provide dwelling coverage, which is what protects a home’s physical structure. Instead, the master condo association policy covers the physical structure.

“Condo coverage is usually made up of the interior structure and the interior finishings — which include built-in appliances, flooring such as tile or carpet, and heating and cooling equipment,” says P.J. Miller, partner with Wallace & Turner Insurance.

Coverage for earthquakes, floods, sewer backups, sinkholes, and building collapses are typically excluded from condo insurance. You may be able to obtain protection for these and other exclusions by purchasing extra coverages or separate policies.

Types of condo insurance coverage

There are different parts of a standard condo insurance policy, each designed to cover different things. Here’s what each section covers.

Personal property coverage

Personal property protection covers everything in your home: your appliances, furniture, clothing, electronics, dishes, linens and other personal items.

“Having personal property coverage is critical, as most condo association policies don’t provide coverage for your personal belongings if they are damaged or stolen. This coverage safeguards these household items in the event of fire, theft, or other covered losses,” explains Adam Bakonis, product manager at Mercury Insurance.

You can have personal property insurance for actual cash value or replacement cost coverage.

Actual cash value pays damages equivalent to the replacement value of your damaged property minus any depreciation.

“Say your two-year-old big screen TV is destroyed in a fire. Your claims payment will be based on what that television is worth today, not when you bought it, which could be half the cost or less,” Bakonis adds.

Replacement cost coverage covers items at their replacement cost value today, without deducting depreciation. Replacement cost value provides more money when you file a claim, but it also costs more money to have that level of coverage.

“Assume your sofa is destroyed in a condo fire. With replacement cost coverage, it can be replaced at full cost, no matter how old it is. You will be compensated with a similar item to the one that was damaged or destroyed, at today’s prices, with this type of coverage in place,” says Bakonis.

There are special limits on certain types of personal property, like jewelry and art. You can increase this coverage with an endorsement or scheduled personal property floater.

Personal liability coverage

Personal liability pays for injuries, damages and legal bills resulting from your actions. It applies when your negligence causes someone else to be hurt or their property to be damaged. For example, if you don’t clear your sidewalk in the winter and someone slips and breaks an arm, you can be held liable.

“In this scenario, personal liability coverage may help you pay for related legal expenses or your guest’s resulting medical bills,” says Friedlander.

Personal liability covers you both on and off of your property.

Loss of use coverage

Also known as additional living expense coverage, loss of use coverage pays for temporary shelter, such as lodging costs at a hotel, due to damage to your condo unit by a covered peril that makes your unit temporarily uninhabitable.

“This coverage is designed to put you in the same or similar housing you had until the damage is repaired or the amount of loss of use coverage is exhausted,” says Miller.

Guest medical coverage

Medical payments coverage pays for medical expenses for anyone accidentally hurt inside your condo. It’s a small coverage meant for minor medical expenses.

“This coverage will pay for things like surgical procedures or hospital stays due to an injury sustained in your unit,” Bakonis says.

Guest medical coverage, unlike personal liability, doesn’t require you to be liable for the injury.

Building property coverage

Building property coverage covers the portions of the condo unit structure for which you are responsible.

“This type of coverage typically helps pay for repairs to the walls of your condo unit and its interior, which could include items such as built-in bookcases and fixtures, if damage is caused by a covered peril,” Friedlander says.

Your condo association’s covenants, conditions, and restrictions (CC&Rs) often indicate what the condo association is responsible for and what you’re liable for when it comes to building maintenance, damages, and repairs.

“Depending on the CC&Rs, this may include flooring, cabinetry, fixtures, appliances, walls, windows, wall finishes, and more. In addition, if your condo association carries a large deductible, you may be responsible for damages under the deductible amount,” says Bakonis.

Loss assessment coverage

Loss assessment coverage helps protect a condo owner from paying out of pocket if their condo association issues a special assessment for expenses related to an insurance claim outside the walls of their unit.

“This coverage provides additional protection in the event your condo association levies an assessment on each condo owner to make common area repairs for a covered loss,” Bakonis says. The cause of the damage or loss must be due to peril or event covered under your policy.

What does a condo association cover?

While your individual condo insurance policy covers your specific unit and issues related to claims or losses that happen within it, a master condo association policy typically protects the entire building.

Friedlander says the master policy generally covers common areas shared with others in the building for both liability and physical damage, including:

Roof
Exterior walls
Hallways
Stairwells
Basement
Recreation room
Elevators
Boiler
Swimming pool
Tennis court
Exercise room
Parking lot
Parking garage

“The property management company or association’s board of directors is responsible for obtaining and maintaining this coverage, and premiums are usually paid for via funds collected from each unit owner’s maintenance fee or association dues,” Friedlander says.

What are the levels of condo insurance?

Condo associations master policies have one of three levels of coverage. What the association covers determines how much condo insurance coverage you need.

The three levels of condo insurance are:

Bare walls coverage

With bare walls coverage, the condo association is usually only responsible for insuring the bare walls, original floor, and ceiling.

“As the name implies, bare walls coverage protects the structure itself, from the roof and siding or stucco up to the bare interior walls of your unit,” cautions Bakonis. “Damage to your fixtures, cabinetry, appliances, new flooring, or even wallpaper in your unit due to a fire, vandalism, or other loss would generally not be covered by bare walls coverage.”

Single entity coverage

With single entity coverage, the condo association commonly covers the structure and fixtures within each unit as the unit was originally constructed. However, the condo association’s master policy doesn’t provide protection for improvements made since that time.

“For example, if the condo was built with standard grade kitchen cabinets, tile countertops, and rolled vinyl flooring, the association policy would cover the replacement with similar materials. If it’s been upgraded to higher-end cabinetry, granite countertops, and engineered wood flooring, the current unit owner would generally be responsible for the additional cost to insure these upgrades” says Bakonis.

All-in coverage

All-in coverage, also called all-inclusive coverage, frequently covers the structure along with fixtures, installations, and additions to the interior surfaces of your unit. This includes improvements and upgrades to your home.

“However, there can be variations in coverage, so unit owners should verify what is and isn’t covered with their condo association or property management company rather than relying on a more generic phrase like ‘all-inclusive coverage,’” Bakonis says.

Condo (HO-6) insurance protects condo owners from potential losses and liabilities. It consists of personal property coverage, personal liability protection, loss of use coverage, guest medical coverage, and building property coverage.

It’s essential to understand the distinctions between individual condo insurance and the condo association’s master policy. The level of coverage the condo association provides—whether bare walls, single entity, or all-in coverage—affects the amount of condo insurance required. Choosing the right coverage and familiarizing yourself with your condo association’s policies will ensure you have the necessary protection.

QuickTake

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Frequently Ask Questions

Can you add endorsements to condo insurance?

Yes. There are a number of endorsements available for condo insurance policies, including for valuable personal property and replacement cost. Ask your insurance company which endorsements are available.

Does flood insurance cover condos?

Yes, you can purchase flood insurance for a condo, either with the National Flood Insurance Program or with a private insurer.

Can condo owners get umbrella insurance?

Yes, condo owners can buy umbrella insurance to provide increased liability protection.

Shivani Gite

Contributing Writer

Shivani Gite is a personal finance and insurance writer with a degree in journalism and mass communication. She is passionate about making insurance topics easy to understand for people and helping them make better financial decisions.