What Is Condo Insurance and What Does It Cover?

Condominium ownership blends aspects of homeownership with shared community living, meaning insurance needs differ from traditional single-family homes. Condo insurance, often referred to as an HO-6 policy, is a specialized form of homeowner’s insurance designed for individual unit owners. It provides financial protection for personal belongings, offers liability coverage, and helps cover the interior structure of their unit. This individual policy works in conjunction with the condominium association’s master insurance policy, rather than replacing it, to ensure comprehensive coverage.

Understanding Condo Insurance and the Master Policy

Understanding the distinct roles of your individual HO-6 policy and the condominium association’s master policy is foundational for condo owners. The master policy, paid for through homeowner association (HOA) fees, primarily covers the building’s exterior, common areas, and structural components. This includes elements like the roof, shared hallways, and elevators.

Master policies typically fall into one of three categories, directly influencing what your personal HO-6 policy needs to cover. A “bare walls-in” policy, the least inclusive option, covers the building’s structure from the drywall outward, including exterior framing, piping, and wiring. This type of policy does not cover anything inside the individual unit, such as appliances or interior finishes.

A “single-entity” or “original-spec” policy offers broader coverage, often including the original fixtures, appliances, and standard finishes within each unit. This means it covers what was initially installed by the builder but generally excludes any upgrades or improvements made by unit owners. The “all-in” or “all-inclusive” policy provides the most extensive coverage, extending to all repairs needed to return a unit to its pre-damage state, including any improvements or renovations made by the owner.

Your HO-6 policy then fills the gaps left by the master policy, specifically protecting what the association’s insurance does not. It is designed to cover the interior elements of your unit, your personal belongings, and your personal liability. This layered approach ensures that both the collective property and individual units are adequately protected against various perils.

Key Coverages in Your Condo Policy

An HO-6 condo policy typically includes several coverages, each addressing different aspects of a unit owner’s risks.

• Personal property coverage protects belongings like furniture, electronics, and jewelry against perils such as fire, theft, and vandalism. This coverage extends to items inside your unit and sometimes off-premises.
• Personal liability coverage provides financial protection if you are responsible for injuring someone or damaging property. This can cover legal expenses and medical bills for guests injured on your property.
• Loss assessment coverage helps cover your share of expenses if the HOA levies a special assessment due to a covered loss exceeding the master policy’s limits or deductible. For example, if storm damage to the roof exceeds master policy coverage, the association might assess unit owners for the remaining cost.
• Improvements and betterments coverage protects upgrades or modifications you have made to your unit, such as new flooring or renovated kitchen cabinets. These enhancements are typically not covered by the master policy, especially under “bare walls-in” or “single-entity” policies.
• Additional living expenses (ALE) coverage, also known as loss of use, covers temporary living costs if your unit becomes uninhabitable due to a covered loss. This can include hotel stays, meals, and other increased living expenses while your unit is being repaired.

Tailoring Your Condo Insurance Coverage

Customizing your HO-6 policy ensures it aligns with your specific needs and the unique characteristics of your condominium. A primary step involves obtaining and thoroughly reviewing your HOA’s master insurance policy and governing documents. The type of master policy, whether “bare walls-in,” “single-entity,” or “all-in,” directly dictates what structural elements your individual policy needs to cover.

Assessing the value of your personal property is another important consideration. Creating a detailed inventory of your belongings, including furniture, electronics, and valuables, helps you determine an adequate personal property coverage limit. You should consider whether you need replacement cost value (RCV) coverage, which pays for the cost to replace items with new ones, or actual cash value (ACV), which accounts for depreciation.

When considering liability coverage, factors such as the frequency of guests, your personal assets, and overall financial exposure should influence the coverage amount you choose. While a minimum of $100,000 is common, many owners opt for higher limits, or even an umbrella policy, to protect substantial assets.

Understanding deductibles is also important; this is the amount you pay out-of-pocket before your insurance coverage begins. Choosing a higher deductible typically results in lower premiums, but it means a larger initial expense if you file a claim. Conversely, a lower deductible leads to higher premiums but reduces your out-of-pocket cost during a claim.

You may also evaluate additional coverage options or endorsements based on your location and specific circumstances. This could include flood insurance, especially if you reside in a flood-prone area, as standard policies typically exclude flood damage. Valuable items floaters can provide extended coverage for high-value items like jewelry or fine art beyond standard limits.