Condo insurance vs. homeowners insurance

When it comes to protecting your home, it’s easy to assume insurance policies are the same. But condo insurance and homeowners insurance serve different needs, particularly in how they handle insuring the structure of the home. 

Condo insurance, also called HO-6 insurance, covers the interior of your unit, including the walls, floors, and cabinets. In most cases, the building's exterior, roof, and shared community spaces are insured by your condo association’s master policy.

Homeowners insurance, also called HO-3 insurance, provides broader protection, covering your entire home’s structure  and other structures on your property.

Below, we break down other similarities and differences between condo vs. homeowners insurance, including how much you can expect to pay for each policy type.

What is the difference between condo and homeowners insurance?

While the key distinction between condo and homeowners insurance is the way the physical structure of the home is covered, several other types of coverage are included in both. Standard HO-6 condo and HO-3 home policies include coverage for personal property, loss of use, personal liability, and guest medical payments. Here’s what to know about included coverage in each policy type.  

Dwelling coverage in condo vs. home insurance

Dwelling coverage is the most substantial portion of a condo or home insurance policy. For condos, dwelling coverage mostly covers the interior, or “walls-in” portion of your unit — things like built-in cabinetry, flooring, fixtures, and interior walls. The condo association’s master policy handles most exterior structures and common areas.

The dwelling portion of a homeowners insurance policy covers the entire structure, including the walls, roof, and foundation. Other structures on your property are also covered in HO-3 policies. These include attached structures like garages and detached structures like sheds.

Typically, both policies cover the same types of damage. Referred to as open-perils coverage, damage from any risk is covered unless it is explicitly excluded by an HO-3 or HO-6 policy. Common exclusions are floods and earthquakes.

Personal property coverage in condo vs. home insurance

Both condo insurance and homeowners insurance cover your personal property like clothing, furniture, and electronics. In both cases, your belongings are typically covered on a named-peril basis, meaning only damage from risks outlined in your policy is claimable. Common covered perils include fires and theft.

Personal liability coverage in condo vs. home insurance

Condo insurance provides personal liability coverage if you are legally responsible for someone else getting injured in your unit or if you accidentally damage someone else’s property. It also covers medical bills and legal costs, judgments, and settlements if you get sued in the process. Additionally, most HO-6 policies include guest medical payments coverage. This can help pay for medical expenses if someone else is injured on your property, regardless of who was at fault.

Like condo policies, standard home insurance also includes guest medical payments coverage. Liability coverage in home policies is similar to that included in condo insurance, but again, it is broader. It covers someone getting injured anywhere on your property — like in your yard or on your sidewalk — not just in your home. For condos, the association’s master policy would apply for injuries that happen on shared grounds. 

Loss of use coverage in condo vs. home insurance

If a covered major event makes your home or condo unlivable while being repaired or rebuilt, loss of use coverage can help you pay for additional living expenses you incur while living somewhere else temporarily. This includes hotel stays, meals out, and more.

Coverage limits in condo vs. homeowners insurance 

For every type of coverage in your insurance policy, a policy limit applies. This is the maximum dollar amount your insurer will pay for a covered claim. How these limits are set differs between standard homeowners policies and condo policies. 

For a house, your dwelling coverage limit is the starting point. All other limits — like your personal property coverage and additional living expenses — are usually calculated as a percentage of that. For example, if your home would cost $400,000 to rebuild, that might be your dwelling limit. Therefore, your personal property limit could automatically be set at $200,000. 

For a condo, however, your limits are generally set independently because your policy only covers the interior of your unit, not the whole building. Because condo limits are often set lower by default, it's particularly important for condo owners to make sure they have enough coverage. 

If you have a large collection of electronics or expensive clothes, for instance, the default personal property coverage limit may fall short. The same goes for the default additional living expenses limit, which would help pay for temporary housing and meals if your home needs to be repaired after a covered incident. For example, if a major disaster like a widespread fire forces you out for 18 months, you might quickly reach your policy limit, leaving you to foot the hotel bill for the remainder of the time.

For these reasons, whether you own a house or a condo, it’s essential to check and potentially increase your policy limits. If your limits are too low, you are essentially gambling with your savings. Speaking with an agent can help determine what’s best for your situation.

Condo insurance tip: Before purchasing a policy, review your condo association’s bylaws and master insurance policy. These documents outline where the association’s structural coverage ends and your personal unit coverage should begin. This can help you fill coverage gaps and avoid overlapping coverage. 

Cost of condo insurance vs. homeowners insurance

Condo insurance is typically cheaper than homeowners insurance because it is more limited in several ways. This includes what’s covered, when it’s covered, and how much your max payout might be in the event of claimable damage.

According to the latest data from the National Association of Insurance Commissioners, the average condo insurance policy costs $572 per year. Standard homeowners policies average $1,569 per year. Keep in mind that individual rates can vary widely based on details specific to you and your condo or home.

Frequently asked questions

What is loss assessment coverage?

When you live in a condo, the association’s master policy covers the exterior structure, walls, and common areas like a playground, swimming pool, lobby, and elevators. If something needs to be replaced, like an older roof, or you have a claim in the common area and the association has a large deductible on the master policy, unit owners might be on the hook to share these unexpected expenses. This is called a special assessment.

Loss assessment coverage can help if there is a covered loss by paying for all or some of your portion. Usually, this coverage is not automatically included in an HO-6 policy. Condo owners can ask their insurance agent about adding it as an endorsement.  

If you live in a townhouse or single-family home that’s part of a homeowners association (HOA), you should consider loss assessment coverage, too. It’s usually not necessary for homeowners who don’t have an HOA, though.

Can I get home insurance for my condo?

HO-6 condo insurance policies are designed to cover condominium units within a building. The building itself is covered by the condo association’s master policy, so condo owners only need “walls-in” coverage for the interior of their individual home. HO-3 homeowners insurance policies are designed to cover the interior and exterior of the home, making this type of coverage redundant for a condo owner. When in doubt, a licensed agent can help you determine which policy type applies to your circumstances.