Condo Insurance: Coverages For Your Individual Unit

Condo Insurance

Property Insurance

Asset Protection

Alice Yao | Updated August 19th, 2020

There are some great benefits living in a condo, such as the convenience of amenities, less maintenance work, sense of community, and my personal favorite, no yard work! Many people also choose a condo for closer proximity to city life and the simplicity of turn-key living. 

If you are buying a condo for the first time, you may be surprised that your home owner association (HOA) dues already include insurance premium for your condo. 

But did you know? Most condo association insurance policies only cover the structure of the building and shared public spaces, and do not extend coverage into your individual unit.

In this article, we will go over the following topics:

Woman reading on her laptop

Do I need my own personal condo insurance? 

In many cases, to cover your own personal items and insure the structures inside of your unit, the answer is yes.

A condo insurance policy, also commonly known as HO6 insurance, is the property and liability insurance that supplements the condo association insurance and focuses solely to protect you, the unit owner. 

Here is an example: Your upstairs neighbors went on vacation and the water pipes connected to their washer had burst. Water flooded their unit, the public hallway areas, and your unit right below it. 

In this scenario, your condo association insurance will only cover the repair to the public hallway areas, and you will need to make a claim with your personal condo insurance to cover the damages to your unit.

What is a condo association insurance and what does it cover?

Condo association insurance, or more commonly known as condo master insurance, is the policy that your condo association has in place to cover the building, all of the common areas, and other shared spaces.

Note: Some condo master policies do include coverages for individual unit interiors.

Different types of master condo insurance

Most condo master insurance policies break down into two types:

  • Bare walls-in: This policy provides coverage for the building structures such as roofing, framing, and insulation. It also insures common areas such as walkways, parking lots, gym, and other shared spaces. This is one of the more common types of condo master insurance. 
  • All-in: This policy extends the coverage of bare walls-in policy to include individual unit fixtures and built-in appliances. Common examples of kitchen cabinets, countertops, dishwasher, etc., are included as part of the coverage. 

There is also a much less common type of condo master policy that only includes coverage for the common areas such as walkways, parking lots, and other shared spaces. This type of policy does not include coverage for structure of the building and is typically found in townhouses.

If you found out that your condo association carries this type of master policy, you would actually need to talk to your insurance agent about getting a homeowners policy to cover the entire structure of your home.

Woman on sofa with her dog

What does personal condo insurance cover?

A condo policy provides coverages for:

  • Unit interior
  • Personal property
  • Liability
  • Medical payment for your guests
  • Loss of use when your unit is not livable 
  • Loss assessment

Unit interior coverage encompasses the flooring, electrical fixtures, built-in cabinets, appliances, and any part of your unit that is attached to the wall. This coverage along with the condo master insurance will essentially cover everything you see that first day before you move in. 

Personal property coverage covers all of your belongings such as your furniture, electronics, clothing, shoes, and etc. Keep in mind that most insurance companies place a limit on valuables such as jewelry, watches, fine art, and other collectibles. If you have high-value personal items, you may want to consider adding a scheduled personal property endorsement to your policy.

Liability coverage provides financial protection for you and your family in the event that you were found legally responsible for injuries or damages to others. This coverage even extends to your pets and will cover costs of injuries or damages caused by your pets including dog bites. 

Medical payment coverage is a form of liability insurance that specifically covers the cost of medical care for injury to your guests while they are visiting. Some great things about this benefit are: no deductible, does not require determination of responsibility, and benefits are available right away. 

Loss of use coverage, also commonly known as additional living expense coverage, is an essential component in your condo insurance. In an event that your condo is not livable due to fire or other covered perils, this coverage will help pay for any additional expenses such as temporary housing, food, moving cost, and more. 

Loss assessment coverage will pay for the rebuild or repair costs that are assessed to you as an individual unit condo owner. This coverage most commonly applies to situations where the damages to public space within your condo community are not covered by the condo master policy or if the coverage has been exhausted.

Condo on a sunny day

How is the premium of condo insurance compared to homeowners insurance?

The premium for a condo insurance policy is relatively inexpensive compared to a homeowners policy. According to the Insurance Information Institute, in 2016, the average premium for homeowners insurance was $1,192, whereas the average premium for condo insurance was significantly lower at $471.*

The major difference in premium is in the coverage for the building structure versus the building interior structures. Under a homeowners policy, the dwelling coverage covers the entire structure of the home including any interior structures attached to the wall. In comparison, under a condo policy, only the interior structures are covered, and the structure of the condo building is insured under the condo master policy.

In our experience, the annual premium for a condo policy in Washington State generally ranges from $300 to $500 depending on the coverage limits and endorsements selected for the policy.

Some factors that go into premium calculation for condo policies are:

Location of your home

Zip code - Insurance companies use data from various sources including their own claims record history to evaluate risk levels of each area. Areas with higher number of claims will have higher insurance premium. 

Fire protection - Your condo's access and proximity to nearby fire stations will also have an impact on your condo insurance premium. Being closer to a fire station allows a higher chance of mitigating further damages to your home in case of fire, and it also lowers the potential cost to repair or even rebuild your home.

Your personal history

Insurance score - It is a metric that insurance companies use to assess individual insurance risk based on a customer's consumer report. Each insurance company uses its own methods to evaluate customers to determine their individual risk. You may request a copy of the consumer report from your insurance agent. 

Credit report - Credit history is one of the metrics used by insurance companies to assess your insurance risk. 

Marital status - In general, a married couple has a lower rate than non-married individuals.

Insurance options

Coverages - Depending on your choice of coverage limits on your unit interior coverage and other available coverage options such as liability coverage, your insurance premium will adjust accordingly. The higher the coverage amount, the higher your insurance premium will be, and vice-versa. 

Deductibles - The amount you choose as your deductible, which is your out-of-pocket expense after a claim, will reflect in the cost of your premium. Your insurance policy may have different deductible options for different coverages. As with all insurance policies, the higher the deductible amount you choose, the lower the premium will be, and vice-versa. 

Claim history - Insurance companies evaluate the history of claim records to assess the probability of future claims. If there has been a high frequency of claims in your past, the insurance premium will likely be higher to reflect a greater chance of future claims. 

Prior insurance history - In order to properly assess frequency of claims, insurance companies will require customers to have a minimum length of insurance history.

Keep in mind that every insurance company offers similar policies with its own unique guidelines. We always recommend talking to your insurance agent to discuss your personal policies in detail. Working with an insurance agent is the best way to make sure you are properly covered.

*“Dwelling Fire, Homeowners OwnerOccupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner’s Insurance Report: Data for 2016” Retrieved 8.3.2020 

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