Condo insurance differs from home insurance in several ways. It’s important to understand these differences and how they might affect your coverage decisions:
1. The biggest difference between homeowners insurance and condo insurance relates to what you own (and therefore need to insure).
With a house, you own it all – the structure and the land. With a condo, you own portions of the condo building (studs in). Common areas like the roof and hallways are owned by the condo association.1 It’s important to know, though, there could be times when you’re asked to pay for damage outside your unit.
Loss assessment coverage protects condo owners when there's a larger, more significant claim involving the building or its common areas. For example, the building experiences wind damage. If the cost of damage exceeds the association's master policy then you and the other condo owners may be responsible for paying the difference. Loss assessment coverage can usually cover this cost, which helps prevent a personal financial strain due to unexpected events.
2. All other things being equal, homeowners insurance covers more than condo insurance.
For example, was the fence at your condo damaged after a windstorm? The condo association’s insurance will probably cover it. If the damaged fence is on your property, your homeowners insurance will cover it.
3. A condo association typically has a master policy that covers damage to certain parts of the property, but it doesn’t cover everything.
A condo policy begins where the master policy ends.2 This doesn’t apply to a homeowner and the applicable homeowners policy.
4. Review your policy to make sure you don’t have too much or too little dwelling coverage.
If you own a condo, it’s important to review the condo association’s master policy. This will explain what the association is responsible for and how high its coverage limits go. Items like flooring, inner walls, countertops and fixtures are your responsibility as a condo owner, so it’s crucial to have adequate dwelling coverage.
If you own a house, remember that replacement value isn’t the same as market value; the former is preferred to ensure adequate coverage because your home’s market value might not cover rebuilding costs.3 Having the right amount of dwelling coverage is important whether you own a condo or home: too much is simply wasting money, too little means you wouldn’t have enough coverage to rebuild after a fire or other disaster.
5. Regarding liability, if a guest at your condo is injured in a common area such as the pool, costs related to that injury may be covered by the association’s insurance.
However, with the same injury at your house, your homeowners insurance can help cover the accident. It’s important to have adequate liability coverage for peace of mind because you can’t predict where an injury might occur, and you want to be covered. You can also secure extra protection with umbrella insurance, which extends liability coverage beyond the limit of your condo or homeowner policy.
6. The contents of your home – your personal property – is another area of consideration because of the difference in coverage limits between a home policy and condo policy.
Whether you own a house or a condo, it’s important to take inventory of your belongings and understand the coverage limits, that is, how much would be covered after a loss. When taking inventory, estimate the value of your possessions and take photos. This will help you determine the right amount of coverage for your personal property, and having a catalog of your belongings will give you peace of mind if you experience an unexpected loss.