Living in a condo has numerous perks. It might come as a surprise, but some prefer condos over a house. Not everyone has the time and patience to work on home improvements. Cutting grass, shoveling snow, and maintaining the roof can take all of your time. People who don’t want to spend a ton of time maintaining a house prefer living in cozy condos. Downsizing from a house to a condo might be more fun than you expect.
If you are in the process of preparing your moving-checklist, keep insurance on number one. You need insurance to ensure that your belongings stay protected. Around 78.3 million Americans reside in homeowners associations and condominium communities. Most people believe that there’s no point in buying condo insurance when they already have homeowners coverage. However, the case with homeowners insurance is a bit different. Homeowners association coverage insures the building and common areas (tennis courts, lobby, elevators) of your condo, but it won’t protect your personal belongings.
Ok… But What Is Condo Insurance?
Condo insurance, also known as condominium insurance, is the coverage that protects your belongings. It is a type of property and casualty insurance that protects condo owners and covers them for all of life’s possible mishaps. Condo insurance typically includes personal liability coverage, guest medical coverage, building protection coverage, and personal belongings coverage.
Condo insurance covers what your homeowners association won’t. Homeowners coverage doesn’t protect the inside of the condo, but condo policies do. From paying liability cost to replacing damaged belongings and repairing the interior after a disaster – most condo insurance policies cover it all.
What Does a Typical Condo Insurance Policy Cover?
There are three master policies that you can choose from. However, a standard condo policy includes:
- Your physical unit
Condo insurance protects the structure of your unit against damages caused by theft and disasters.
- Your personal belongings
Everything you own is valuable. Condo insurance ensures that your belongings are protected against damage and theft.
- Living Expenses
Condo insurance also covers your living expenses when you have to temporarily move out of your condo.
- Additional coverage
Got antique pieces at your home? You can get extra coverage to protect your invaluable items (antique jewelry, kitchenware, coins, instruments).
- Guest medical payments
When a guest sustains an injury in your condo, the insurance pays the medical bills, including the doctor’s fee, emergency room care, and rehabilitation cost.
To buy condo insurance, you should work with an experienced, independent insurance agent. An insurance agent will help you compare costs and choose the policy that is best suited for your needs.
It doesn’t provide coverage for loss that you are liable for. Generally, the policies don’t cover:
- Property damage and bodily injury intended by the insured
- Damage caused by flood and earthquake
- Damage caused by birds, insects, and animals
- General wear and tear
- International injuries
(We have discussed more exclusions below.)
How Much Does Condo Insurance Cost?
In 2017, the policy costed $389 yearly for a policy with $60,000 in property coverage, $300,000 in liability protection, and a $1000 deductible. The average cost of condo insurance varies by state. On average, condo insurance costs around $488 per year in 2021. The most common condo claims are water damage, damage caused by wind & hail, and fire and lightning damage.
Condo Insurance – Master Policies
There are three master policies that offer different structural protection.
- Bare walls coverage: The policy covers real property on the interior of the unit, except for fixtures and appliances (wiring, plumbing, flooring fixtures). It provides a minimal amount of structural coverage and everything behind its wall and floors. It only covers damage caused to the walls, ceilings, and floors of the condo.
- All-in coverage: It covers the entire interior structure of the condo, including fixtures, appliances, and improvements. It offers the most comprehensive type of coverage.
- Single entity coverage: It offers the same kind of protection that bare walls coverage offers, except that it covers both common areas (tennis courts, lobby, hallways, and elevators) shared by property owners as well as individual units.
Difference Between Homeowners Insurance and Condo Insurance
Homeowners and condo insurance offer similar coverages, but they have different characteristics.
A standard homeowners policy covers the outside of the residence’s structure, whereas condo insurance usually covers the inside of the individual unit.
Homeowners insurance costs more and, in some cases, double for the same square foot as a condo. The average annual cost of homeowners insurance is $950, whereas condo insurance costs between $400 to $600.
With homeowners insurance, you can add riders to cover the exterior of the residence, including gardens and landscaping. However, condo insurance only covers common areas shared by the owners and individual units.
As a condo owner, you will have to pay for your unit and the rest of the building through HOA.
Condo owners are not responsible for any physical structure on the land their home is built on – but homeowners are. Homeowners open themselves up to more liability risks than condo owners do.
Mistakes to Avoid When Shopping for Condo Insurance
Most people find insurance complicated. Even with so much information available online, it’s not uncommon for you to still feel unguided and confused. Most condo owners make the efficient decision to purchase insurance. However, they sometimes end up doing more bad than good. If you are tranisiting to the cozy and compact condo life, here are the mistakes that you need to absolutely avoid when shopping for condo insurance:
Not Having Much Knowledge About Condo Insurance
Not having complete understanding of condo insurance and its master policies is the first and most common mistake that condo owners make. You first need to understand what condo insurance is. Condo insurance provides coverage for the interior of your condominium. It covers potential losses caused by theft and fire.
Move to read about the three master policies:
- Bare walks cover the bare structure of your condo
- Single-entity covers fixtures and everything that is included in single-entity
- All-in coverage combines bare walks and single-entity coverage. It is the most comprehensive type of condo insurance
Not Insuring the Interior of the Condo
Homeowners insurance covers the entire exterior of the building. It doesn’t include replacement and improvement of appliances, flooring, and walls. To insure the interior, you need to invest in a comprehensive condo insurance policy.
Only Prioritizing Price
It’s not wrong to prioritize price when buying insurance. However, ONLY prioritizing price is wrong. Insurance prepares you for the worst that might happen. The premium cost would be way less than the mishaps that could occur.
Finding a trusted insurance company is not tough. Make sure that you don’t fall prey to the companies that advertise low premiums. You can communicate your budget to insurance companies and they’ll figure something out for you.
Assuming that HOA Covers the Entire Property
Similar to other insurance policies, homeowners insurance doesn’t cover everything. HOA coverage doesn’t exceed to the interior of the condo. Condo insurance fills in the gap where your homeowners and condo corporation’s policy don’t protect you.
HOA covers incidents that occur outside the condo. But if your friend sustains an injury in your bathroom, it’s all on you.
Not Choosing a Comprehensive Policy
There’s no point in getting insurance when you are keeping the doors of possible mishaps open. Getting insurance means getting 360-degree protection and shutting all the ‘’what-if’’ doors. Invest in a comprehensive condo insurance policy that covers all the unique items that you own. Have a detailed conversation with your agent to ensure that all valuable items are covered and protected.
Choosing Cash Value Over Replacements Cost
One of the most common mistakes that condo owners make is that they choose cash value reimbursement over full replacement cost.
Cash value means that you will be reimbursed for the original amount you paid for coverage for an item, minus depreciation.
Most people choose cash value instead of full replacement cost because it helps you lower your insurance premium cost. However, you might end up paying more than you would have otherwise.
Working With Too Many Insurance Agents
The idiom, ‘too many cooks spoil the broth’, is valid in the insurance world as well. Working with too many insurance agents does more harm than good. It’s better to stick with one experienced insurance agent than doing business with ten inexperienced ones. A professional insurance agent will take you through the whole process and save you time.
If you still want to work with more than one insurance agent, limit the number to three.
Questions to Ask Before Buying Condo Insurance
How Much Coverage Do I Need?
It totally depends on what you are keeping in your condo. If you use outdoor storage areas, you will have to choose a policy that exceeds its coverage to the condo’s exterior. You need enough coverage to replace all of your belongings and furnishings. From appliances and flooring to kitchenware, make sure that everything is covered.
How Much Does Condo Insurance Cost?
You will most likely have to pay $300 to $400 annually when the policy covers contents up to $25,000, walls and floors up to $20,000, and $100,000 of liability claims. The annual premiums go up to $400 to $500 when the policy covers $50,000 on contents as well as walls and floors and $300,000 worth of liability coverage.
Insuring a 1-100 foot apartment worth $1 million costs $1,100 to $2,400 annually. The cost of condo insurance varies from state to state, with Iowa being the least expensive and Florida being the most expensive.
| State | Average Annual Premium Cost |
| Connecticut | $395 |
| Newyork | $540 |
| D.C | $364 |
| Alaska | $374 |
| New Jersey | $437 |
| Washington | $360 |
| Pennsylvania | $377 |
| North Carolina | $428 |
| Florida | $942 |
| Georgia | $473 |
| Iowa | $279 |
What Will Be My Insurance Cover?
There are three master condo policies to choose from — bare walks, single-unit, and all-in coverage. If you are looking for comprehensive coverage, you can consider going for an all-in coverage. The cost of an annual premium also depends on how comprehensive your coverage is. Generally, the policies cover:
- Damage caused by smoke or fire
- Damage caused to your unit due to an explosion
- Plumbing related issues
- Damage caused by vandalism
- Theft in your unit
- Damage caused by hail or wind
- Injury caused to a visitor by falling and slipping
- Damage to the lighting system in your condo
- Alternate living expenses in case you have to relocate temporarily
- Additional coverage if you keep valuable and antique items in your condo
Will My Insurance Pay for Temporary Housing?
Policies include the extra costs incurred when you are temporarily displaced from your condo. It’s often part of a standard condo policy.
This loss of use coverage comes into play when your condo gets badly damaged by fire, smoke, gas, line explosions, vandalism, and you are left with only one choice – to move out of your condo.
What Doesn’t My Insurance Cover?
Condo insurance policies don’t cover damage involving:
- Damage caused to the apartment from floodwater and sewage
- Damage from insects and birds
- Short-term renters
- Damage caused to the condo by earthquakes
- Damage caused to your unit by nuclear hazards
- General wear and tear to the condo
- The policyholder causing an intentional injury to anyone inside the condo
Wrapping Up
Condo insurance is a great way to fill in gaps where homeowners insurance doesn’t protect you. It protects elements of a condominium unit along with the owners’ valuables and personal belongings. Homeowners and condo insurance feature different characteristics. It’s useless for you to get outside-your-condo coverage when the inside of your condo isn’t protected.
Having an extra layer of protection becomes necessary when you choose a condo as your residence.
Pawson Insurance | Legal Disclaimer |
Informational statements regarding insurance coverage are for general description purposes only. These statements do not amend, modify or supplement any insurance policy. Consult the actual policy or your agent for details regarding terms, conditions, coverage, exclusions, products, services and programs which may be available to you. Your eligibility for particular products and services is subject to the final determination of underwriting qualifications and acceptance by the insurance underwriting company providing such products or services. Statements on this website as to policies and coverages provide general information only. This information is not an offer to sell insurance.