If you own a condo, it’s vital to have insurance to protect you and your assets if they become damaged, stolen, or broken. This form of insurance is similar to homeowners insurance as it protects the structure of your condo and your belongings inside, but there are key differences.
While homeowners own the land and entire home, condo owners only own a small section of a building. Condo insurance also includes other forms of protection.
Here's a breakdown of the basics of condo insurance, what your policy may look like, and answers frequently asked questions along the way. Plus, we throw in a few tips on how you can save money and find the best insurance policy for you.
Condo insurance protects the inside of your condo and any property or belongings inside that are damaged or stolen. There are two important aspects of this insurance: your master policy and your policy.
Your building owner or landlord will pay for the master policy while you will pay for the individual policy. Some master policies also vary in what they cover, so you may need more or less coverage, depending on your condo’s master policy coverage.
Master condo policy
This part of your condo insurance coverage protects the actual structure of your condo. For instance, the hallways in your building, the roof, the elevator, the basement, and the laundry room if you have a shared laundry space will be protected by the master policy. Any other common area shared by tenants will also be protected under the master condo policy.
If you live in an older condo unit, your master policy may even cover your individual dwelling spaces as well. Some master policies cover all original structures in the building, so you’re only responsible for insuring additional structures like remodeling or rebuilding a feature. In this case, they may cover built-in plumbing, cabinets, appliances, and anything else that originally came with the condo.
On the other hand, some master policies only provide insurance for the basic structure of the condo. This includes floors, walls, and the ceiling and windows. Everything else (kitchen cabinets, appliances, plumbing fixtures, wiring, etc.) is up to the individual tenant to insure.
Individual condo policy
The individual condo policy is always based on what your master condo policy covers. Whatever the master policy doesn’t protect is up to you to insure with your condo policy. To figure out what is covered in the master policy and what isn’t, take a look at your condo’s bylaws or the proprietary lease.
You can ask anyone who manages the company or building for this information or ask your condo association or attorney as well.
Liability coverage protects you if a visitor or guest is injured while in your condo and you are at fault or found liable. This aspect of your condo insurance policy would protect you and cover the guest’s medical bills and cover any legal fees if they file a lawsuit.
Having this form of coverage is essential. If you don’t have adequate liability coverage, you may be left with thousands of dollars in medical expenses. This can even result in your assets being seized if you are unable or unwilling to pay.
Building property protection
Your condo insurance policy will also cover any parts of your building that the master policy does not cover. For instance, if the master policy only covers the basics of your building (floors, walls, doors, windows) and not cabinets, appliances, plumbing, or electrical fixtures, or additions, your policy will.
Personal property coverage
Another thing covered by your policy is personal property. Any belongings you have can be covered under this form of insurance. For instance, if you have an expensive art collection, jewelry, fine dining wear, electronics, or even a collection, you can insure it under your personal property coverage. If these are stolen or undergo damage from fire or water, you can file a claim and get coverage.
There are two forms of coverage options under personal property coverage. You can get an actual cash value policy, or you can get a replacement cost policy.
An actual cash value plan only pays for the current market value of the items insured. Let’s say you purchased the newest MacBook in 2017, but in 2021 it was damaged. Insurance would not give you the exact amount you paid for it. They would give you the depreciated cost of the laptop.
If you invested a lot of money into a collection, you might consider getting a replacement cost policy. This kind of insurance reimburses you with the exact amount you paid for the items insured. Even if they have depreciated and are no longer expensive, you will get all your money back if they’re insured under replacement cost coverage. It’s important to remember that there are limits and deductibles for both of these coverages.
Condo insurance FAQs
Condo insurance can be difficult to navigate and prepare for as you won’t know how much you need until you rent or buy a condo and read your condo association’s master policy.
Here are some frequently asked questions and answers about condo insurance.
How much does a condo policy cost?
You only pay for the individual condo insurance policy. These costs vary depending on what is included in the master coverage policy and what is left for you to cover. This insurance also depends on what state you live in. However, the national average for an annual condo insurance policy is $488, according to data from the National Association of Insurance Commissioners.
Is condo insurance required?
Having an individual policy is typically required by both your lender at the bank and your condo association.
Your lender will require an individual condo insurance policy to protect their assets. If your condo is damaged due to fire, weather, or vandalism, you cannot repair your unit and pay for your condo; your lender would be unprotected. By requiring condo insurance, your lender or bank protects their money until you’ve paid off the condo.
Your condo association will also likely require an individual policy. This helps them protect themselves and their property in the case that your condo is damaged or destroyed. If you’re unable to repair any damages, the other tenants could suffer, so requiring you to have a policy protects them too.
Even if condo insurance is not required by your lender or condo association, it still may be a good idea. Having to replace and repair aspects of your condo may result in significant out-of-pocket expenses. By purchasing some form of individual coverage, you can protect yourself and prevent having to pay for these.
Am I covered if my condo building collapses?
While nobody wants to think of a terrible situation like a building collapse, it can happen. A condo building collapse may occur from weather such as ice or snow buildup, or a tree falling onto the structure in a storm. A renovation/construction project may also cause a property structure to collapse.
Typical homeowner and business property insurance policies may provide some coverage in the event of a building collapse, but only if caused by certain specified events (named peril in the policy).
Note, this is different from ground cover collapse such as a sinkhole.
Are there other forms of coverage I need?
Here are some additional policies to consider purchasing to protect you and your condo.
Loss Assessment Coverage. This insurance protects you if fire or water damages a common area shared by all tenants. This policy helps you pay for part of the damages.
Flood Insurance. The standard condo policy does not usually include flood insurance, so it may be a good idea to invest in some if you are in a flood zone or a high-risk area. Your lender can also require flood insurance. This protects you against damage due to flooding and helps you repair and replace your condo.
Earthquake Insurance. Similarly, earthquake insurance covers you if an earthquake damages your condo. Some lenders also require this form of coverage, especially if you live in a high-risk area.
Umbrella Insurance. Umbrella insurance is extra liability insurance for when you reach the liability limit on your policy.
Endorsements. If you want extra personal property coverage, you may want to consider purchasing an endorsement such as scheduled personal property coverage.
How to save on condo insurance
There are plenty of ways to save money when purchasing condo insurance.
- Shop around for discounts
Compare companies for the lowest coverage
Bundle your policies for discounted rates on all
Add home-security devices