Owning a property – whether it is a condo or a home – comes with its fair share of considerations; one of which is insurance coverage. While both are dwellings that you own, the policies that you need for both types of dwellings have several key differences. Here, we’ll look at some important distinctions between condo insurance vs. homeowners insurance.
PHYSICAL LOCATION OF COVERAGE VARIES
Condo Insurance: Condominiums, or condos, are private individually-owned units within a community of other units. Condo insurance covers explicitly what is or occurs inside the unit. While there are large amounts of shared spaces in a condo building, those shared spaces are actually covered by a different type of policy.
Homeowners Insurance: Homeowners insurance is purchased by individuals who own homes and property. This type of policy provides broader coverage for the property including damages to the interior and exterior of the home and incidents that occur outside of the dwelling itself – but still on the property.
COVERAGE BY ASSOCIATION IS POSSIBLE
Condo Insurance: Your coverage needs for your individual condo insurance policy will likely depend on the amount of coverage provided by the owners of your building. Most states require that owners of condo buildings purchase condo association insurance (often referred to as a master policy). This type of policy generally protects your condo association from being fiscally responsible for property damages or personal injuries that occur in the common areas or the shared amenities provided by the association.
That being said, there are more comprehensive condo association insurance policies that will provide a “bare-walls” policy (which covers studs, drywall, and insulation) or an “all-in” policy (that can provide coverage for much more – maybe even your cabinets and flooring) in individual units.
Homeowners Insurance: If your home is in a community that has a homeowners association, they will likely have homeowners association insurance. However, the scope of homeowners association insurance is not intended to provide any coverage for the individual homeowner. Instead, this type of policy covers the association for liability concerns in neighborhoods as well as the risks people acting on behalf of the HOA take to maintain the property. Because of this, the amount of coverage you need for your home will not depend on your HOA’s insurance policy.
DWELLING COVERAGE VALUATION COULD DEPEND ON OTHER COVERAGE
Condo Insurance: The amount of dwelling coverage that you’ll need on a condo insurance policy depends on what the condo association insurance policy already covers. As we’ve mentioned, different condo association insurance offers different levels of coverage, so the starting point would be to check to see what the master policy covers and determine your own needs on top of that.
Because condo association insurance is responsible for the actual structure of your home, the coverage limits of your condo insurance policy should depend on the much it would take to replace the upgrades you have made to the interior of the condo.
Homeowners Insurance: Dwelling coverage in homeowners insurance is based on the replacement value of the home – that is, how much it would cost to rebuild it. Note that that figure is not necessarily the same as what you purchased it for.
You can get a rough estimate for replacement value by using an online calculator or with the help of one of our experienced team members at Independent Insurance Associates. Because the amount of coverage you’ll need depends on your home’s specific upgrades and features, the more information you can provide about those features – the better! We want to make sure your coverage doesn’t run short.
PERSONAL PROPERTY MAY OR MAY NOT BE COVERED
Condo Insurance: Coverage for belongings or other personal property in the condo is up to the owner of the condo unit – it will not be covered by the condo association insurance policy, and it isn’t typically covered by a standard condo insurance policy either. You may need to purchase additional insurance or add a rider to your existing policy to provide coverage for your personal belongings.
Homeowners Insurance: Some degree of personal property coverage is typically included in a homeowners policy; however, there are limits to the amount of personal property. If you have high-value items, be sure to get a specific rider to cover those items as personal property policies typically have coverage limits.
RENTALS AND RENTERS NEED ADDITIONAL POLICIES
Condo Insurance: Even though you can get rental coverage on a condo, condo insurance is different than renters insurance. Renters insurance is intended to cover someone who rents a unit or lives there temporarily. That is why people who own condos need a different policy.
If you own a condo and are considering renting it out to an individual, you may need a separate type of policy called condo rental insurance which is specialized for this particular rental situation. This type of policy is focused more on liability in case something happens to someone inside the condo and also protects the interior work that the owner of the unit (not the renter) has done.
Homeowners Insurance: Standard homeowners insurance policies are not adequate to provide coverage for homes you own and rent to individuals long term. When you make an income from the rental of a property, it is no longer your “home” and instead a business. Because of this, you will need rental property insurance if you have tenants for 6+ month stays. If you do live at your home and use your home for short-term rentals only, you may be able to add a rider to your homeowners insurance policy to get the coverage you need.
We recognize how difficult it can be to navigate all the insurance options available to you – you can get coverage for just about anything! At Independent Insurance Associates, we will never “nickel and dime” you into purchasing policies that you don’t need. Give us a call today to see how we can help!