Condo Insurance: Cost, Coverage, Benefits and More | Trusted Choice

Condo Insurance

The Condo Insurance Cheat Sheet

(What it is, why you need it, and how to get it.)

Maggie Tiede | December 8, 2019
Condo Insurance

Condos offer the benefits of home ownership without all the risk. Shopping for condo insurance, also called HO6 insurance, is often easier and cheaper than typical homeowners insurance and may even be subsidized by your homeowners association.

If you’re considering buying a condo, or you already own one, this guide will fill you in on everything you need to know about condo insurance. When you’re ready to look for quotes, independent insurance agents are on hand to help you shop for the insurance coverage that’s just right for you.

What Is Condo Insurance and What Does It Cover?

Condo insurance—which is also called HO6 insurance— has three parts:

What is Condo Insurance and What Does It Cover?
  • Dwelling insurance: Covers structural elements like walls and floors.
  • Personal property insurance: Covers your possessions stored in the uni.t
  • Liability insurance: Covers legal fees if someone sues you in cases related to your home.

Condo insurance works similarly to single-family homeowners insurance, but it’s usually a little more customizable. You may decide that you only want to buy personal property and liability insurance if your dwelling insurance is covered by your homeowners association.

Is Condo Insurance Covered by the Homeowners Association (HOA)?

Sometimes, homeowners associations pay for dwelling insurance as part of your association dues. You’ll still need to purchase personal property and liability coverage, but you won’t have to worry about structural damage.

However, you definitely shouldn’t assume that your homeowners association will cover everything. Always ask what they cover and what you’re responsible for yourself, preferably before you even make an offer on the condo.

Most of the time, condo owners will bear 100% of the responsibility for insuring their unit. Help from your homeowners association is the exception, not the rule.

What Risks Do Condo Owners Face?

Condos often come equipped with special safety equipment. Sprinklers and high-tech security systems are way more common in large condo complexes than they are in your typical single-family home. Condos are also commonly smaller than single-family homes, which means they’re usually less expensive to repair.

Insurance companies love both of those things and often offer better rates to condo owners because of it. However, there are still plenty of risks for condo owners to consider:

  • Crime: Criminals and vandals could damage your condo and steal or destroy the stuff inside it.
  • Natural disasters: Fire, hurricanes and other forces of nature can strike condos just like single-family homes. Your homeowners association may pay to repair the building, but you’ll still be on the hook for damage to your unit.
  • Legal issues: Living in a condo typically means living in close quarters with your neighbors. That can mean legal trouble down the road if you get into conflicts about noise, renovations, sublets, short-term rentals like Airbnb, and more.

Condo insurance is designed to cover these and many more sticky situations for condo owners.

Is Condo Insurance Mandatory?

Condo insurance may be a legal requirement depending on your state and municipality, but even if it’s not mandatory, it’s a practical necessity. Your homeowners association may require you to have it. Your bank will almost certainly require it if you’re planning to get a mortgage.

That’s because a crisis in your condo doesn’t just affect you—it affects the units around you and affects your lenders if you can’t afford to make payments. Condo insurance is usually even cheaper than homeowners insurance. There’s no real reason not to have it, and many, many reasons why you should have it.

Why Is Condo Insurance Important?

Living in a condo can sometimes feel like it has the perks of both home ownership and renting. Condo owners are rarely responsible for lawn maintenance or fixing a broken boiler, for example. But a burglar or natural disaster can bring that harmonious balance crashing down—fast.

If your unit is damaged or your stuff is stolen, it’s your responsibility to fix it. Most people don’t have thousands of dollars lying around to do major repairs or replace everything they own. That’s where condo insurance comes in.

Condo insurance is especially important because damage to your unit doesn’t affect just you. It affects your neighbors in your building or complex, too. Consider these situations:

  • Your dishwasher breaks and floods your kitchen, causing water to seep into nearby units.
  • A fire in your unit sets off the sprinklers, causing damage to hallways and common areas.
  • Broken glass from a break-in injures a neighbor.

In these situations, on top of dealing with your own problems, you could be saddled with an even bigger bill from your neighbors. Condo insurance helps you make things right quickly.

How Much Does Condo Insurance Cost?

The cost of condo insurance depends on the size and value of your unit as well as any special risks in your area. A condo in a high-crime area will be more expensive to insure than one in a safer area, and a $500,000 condo will cost much more to insure than a $150,000 one.

Condo insurance usually costs between $200 and $2,000 per year, with most condo owners falling on the lower end of that range, especially if they’re only buying personal property and liability coverage.

How Independent Insurance Agents Make Shopping for Condo Insurance Easy

Insurance is sold two ways: through captive and independent insurance agents. Captive agents are bound to one company only. Independent agents can shop between as many companies as they want, so they can find you the real best deal for you—not just the best deal one company offers.

In short, independent insurance agents are industry experts and savvy shoppers who can help you find the coverage you want without all the hassle. Don’t shop for condo insurance without one.

TrustedChoice.com Article | Reviewed by Paul Martin

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