Condo Insurance vs Home Insurance: What Is the Difference?
A condo owner and a house owner both insure a home, but the policies are built differently. With a condo, part of the building is already covered by the association, and your policy is meant to fill in around it. Knowing where the line falls prevents an unpleasant surprise at claim time.
Home insurance, in short
- Dwelling cover for the structure of the house
- Other structures such as a garage, fence or shed
- Personal property inside
- Liability if someone is injured on your property
- Loss of use, if a covered loss makes the home unlivable
Condo insurance, in short
A condo policy generally covers the inside of your unit, your belongings, your liability and your loss of use. The building itself, the roof, the exterior walls and the shared areas are usually covered by the association's master policy, which you help pay for through your dues.
The master policy: ask which type it's
- Bare walls: the association covers the structure only, and interior fixtures, flooring and cabinets are yours to insure
- Single entity or standard: original fixtures as built are covered by the association, while upgrades you added are yours
- All-in or all-inclusive: the association covers more of the interior, though terms still vary
- Ask for a copy of the master policy and the declaration, and ask your agent to read it with you
Loss assessment, the gap people miss
If a covered loss to shared property exceeds the master policy, the association can bill each owner a special assessment. Many condo policies include a small amount of loss assessment coverage, and it can often be increased. Ask what limit you have and what a realistic assessment in your building might be.
Things both policies usually exclude
- Flood damage, which generally needs a separate flood policy
- Earthquake damage, often a separate policy or endorsement
- Normal wear and tear or poor maintenance
- Some kinds of water damage, depending on the cause
Questions to ask your agent
- Which parts of my unit does the master policy cover, and which are mine?
- Am I covered for the upgrades I made, such as new flooring or a renovated kitchen?
- How much loss assessment coverage do I have?
- Is my personal property covered at replacement cost or actual cash value?
- Is the master policy deductible shared, and would I owe part of it?
- Do I need separate flood cover for this location?
Renting out the unit, or renting one
If you rent your condo to someone else, a landlord policy is usually needed instead of an owner-occupied policy. If you rent a condo from an owner, their policy doesn't cover your belongings or your liability, so renters insurance is the right fit.
Why this matters for older owners
Many people downsize from a house into a condo or an age-restricted community. Carrying over the old home policy rarely fits, and dues don't replace a personal policy. Review both the master policy and your own cover at the point of the move.
Questions
Is condo insurance cheaper than home insurance?
Often, because the association insures the building. It depends on your unit, location and limits.
Do I need condo insurance if the association has a master policy?
Usually yes. The master policy generally doesn't cover your belongings, your liability or your interior upgrades.
What about a townhouse?
It depends on whether the structure is individually owned or part of an association. Your agent can tell you which policy type fits.
General information only, not financial, legal or insurance advice. Rules, prices and benefits vary by state and by policy. A licensed professional can explain what applies to you.