How Is Condo Insurance Different From Homeowners?

Q: How is condo insurance different from homeowners insurance?

My husband and I are looking into buying a condo, but I am having trouble understanding the difference between condo insurance and homeowners insurance. How do the differences affect me? What kind of coverage will I need?

A: Overall, condo insurance is actually pretty similar to homeowners insurance. In terms of contents and liability coverage, the two products are virtually identical. However, when it comes to structural coverage, also referred to as Coverage A, the differences are vast.

A condo insurance policy is not designed to cover the structure of the building in which your unit is located, as that is covered by your condo association’s master policy. Depending on the type of coverage that is offered by that policy, you, as a condo owner, would need to purchase one of two types of structural coverage: betterment and improvement coverage or “studs in” coverage.

Betterment and improvement coverage is designed to cover all improvements made to your condo above what was included in the base model. It is important to remember that you are covering all improvements that have been made, not just the ones you have made yourself. For example, if the base model included linoleum countertops and a previous owner upgraded them to granite, you would need to cover that addition in order to be compensated for the value of the granite if it is damaged by a covered event.

“Studs in” coverage is the more commonly purchased Coverage A type. It provides structural coverage for everything within the unit itself. This includes such things as drywall, cabinetry and built-in appliances.

If you are a condo owner who is uncertain about which coverage type you need or how much coverage is necessary, you can show your condo agreement to a local Trusted Choice® insurance agent. Your agent should be able to help you decipher what is and is not covered by the master policy and can advise you on the right coverage options and amounts that will keep you protected.