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Condo Insurance Basics

Jason Metz

What does condo insurance cover?

Condo insurance typically covers:

  • Your personal property (furniture, rugs, clothes, toys, TVs) from problems such as theft and fire.
  • Interior walls and other inside items such as cabinets, if they’re not covered under insurance purchased by a homeowners association (HOA) or condo association.
  • Liability in case you’re responsible for damage or injury to someone else.
  • Additional living expenses if you can’t live in your condo because of damage that’s covered by the policy (such as a fire or tornado).

Your condo association likely has its own property insurance policy for common areas of the building. To cover your own property, you’ll need a condo insurance policy, called an HO-6. This typically covers interior walls if they’re excluded from the condo association’s master policy and your personal belongings.

A condo insurance policy generally covers damage from the following problems, known as “perils”:

  • Fire or lightning.
  • Windstorm or hail.
  • Explosion.
  • Riot or civil commotion.
  • Aircraft.
  • Vehicles.
  • Smoke.
  • Vandalism.
  • Theft.
  • Falling objects.
  • Weight of ice, snow or sleet.
  • Accidental discharge or overflow of water or steam.
  • Sudden and accidental tearing apart, cracking, burning or bulging.
  • Freezing.
  • Sudden and accidental damage from artificially generated electrical current.
  • Volcanic eruption.

Condo insurance also generally covers personal belongings when they’re outside your home. For example, if your bike is stolen outside your office or your laptop is stolen from your car, it’s likely covered by condo insurance.

Actual cash value vs. replacement cost

You can choose between “actual cash value” and “replacement cost” coverage for your possessions. This is an important decision because it will affect how much you’ll get paid if your possessions are damaged. Generally, replacement cost coverage is the better choice. Replacement cost coverage also raises the condo insurance cost.

Types of condo insurance payment How it works
Actual cash value 
  • Pays for items at their value when they were damaged.
  • Takes depreciation into account.
  • Example: If your 10-year old living room set is destroyed, you’ll be compensated for a 10-year old living room set.
Replacement cost value 
  • Pays for new items that are of “like kind and quality.”
  •  Example: If your 10-year old living set is destroyed, you’ll be compensated for a new set.

A condo insurance policy generally covers liability, such as:

  • Guests’ medical bills resulting from injuries that you’re responsible for.
  • Certain lawsuits against you or anyone in your household.

A condo insurance policy also typically covers additional living expenses if the condo is uninhabitable due to damage. These extra expenses can include:

  • Hotel or rental home costs.
  • Restaurant bills.
  • Laundry.
  • Pet boarding.
  • Other additional expenses that you wouldn’t normally have at home.

Why do I need condo insurance?

Mortgage lenders and HOAs typically require condo owners to have insurance.

What does HOA condo insurance cover?

A typical HOA policy covers the building’s exterior and shared spaces, such as hallways, stairways, elevator, boiler room, swimming pool and roof. You’ll need to know if the master policy also covers the interior walls of your unit. An HOA policy is often referred to as the “master policy.”

An HOA condo insurance policy is usually a “bare walls in” or “all in” policy:

  • Bare walls in: Covers only the exterior of the building and shared areas. You’re typically responsible for replacing flooring, built-in cabinets, sinks, toilets and improvements you’ve made to the condo.
  • All in: Covers the exterior and interior of the building, but not your personal belongings. This would mean your own condo policy only needs to cover your possessions such as clothes and furniture.

How much condo insurance do I need?

Depending on what the HOA policy covers, you’ll want to consider the following to determine how much condo insurance you’ll need:

  • The cost to rebuild or replace your condo. This depends on the master policy; for example, a “bare walls in” policy wouldn’t include repairing or replacing items such as cabinets, lighting or flooring.
  • The value of your personal property, like clothing, furniture, jewelry and other items.

What is the difference between homeowners and condo insurance?

Homeowners need to insure all their property, from structures to possessions. Condo owners typically only need insurance for the interiors of their condos and their belongings. For example, home insurance can cover outside fences and shrubbery from tornado damage, and an HOA policy would cover fences and shrubbery for condo owners.