Condo insurance vs. homeowners insurance: How are they different?

What are the key coverage differences between condo and homeowners insurance?

The main difference between a condo policy and a homeowners policy is that condo insurance covers the interior of the unit, while homeowners insurance covers the entire structure, inside and out. Both cover personal property and personal liability.

A homeowner's insurance policy covers the calculated replacement cost of the house; that’s how much it would cost to rebuild it from the ground up.

Condo insurance covers only what the condo owner is responsible for. That excludes the building's exterior and its actual structure. Depending on the policy, it may include everything from the walls-in (flooring, kitchen cabinets, fixtures, and more) or only a limited amount of building property. How much condo insurance you need depends on what your HOA covers.

A homeowners insurance policy covers the exterior, the interior and everything else on the property like a fence or a shed. That’s why homeowners insurance rates are generally higher than condo insurance rates.

While most of the coverages on a condo policy are the same as a homeowners policy, there are a few other differences.

For instance, condo owners may need loss assessment coverage, which helps pay any claims for which all HOA members are responsible. A condo owner’s liability coverage doesn’t cover anything that happens in communal areas, as that falls under the condo association’s policy.

Make sure you understand all of the coverages on your home insurance policy fully.

Condo vs. homeowners insurance: Comparison of coverage components (dwelling, contents, liability and loss of use)

Condo and homeowners insurance include the same basic components, with a few important differences. Dwelling, or building property, coverage differs in scope, while liability insurance covers different areas. Condo insurance includes loss assessment coverage, which covers association-related expenses and isn't needed for homeowners insurance.

Here’s a quick breakdown of condo vs. homeowners insurance, what they have in common and how they differ so you know what you’re getting when you buy condo insurance.

*Condo rate based on $60,000 personal property coverage, $300,000 liability, $1,000 deductible. Homeowners rate based on $300,000 dwelling coverage, $300,000 liability, $1,000 deductible.

What does homeowners insurance cover that condo insurance doesn't, and vice versa?

Homeowners insurance covers the structure of the house, including attached components like porches or decks, other structures on the property such as sheds and fences and landscaping on the property. Condo insurance includes none of these coverages, because they are covered by the HOA.

On the flip side, condo insurance includes loss assessment coverage that pays for damages to community property exceeding the HOA's coverage limits that are then spread among the condo owners. Homeowners insurance doesn't include this coverage.

Which insurance type do I need, condo insurance or homeowners insurance?

Generally, if you are buying a home that has an association master policy in place (there is an association that purchases coverage for the structure and common areas) you need a condo policy.

If you are buying a single-family home for which there is no master policy, you need homeowners insurance. Having a homeowners association (HOA) doesn't automatically mean you need condo insurance. While many communities do have HOAs, they generally don't buy any insurance coverage for the homes in the community.

There are a few cases where the choice of coverage may be more nuanced, due to shared walls:

• If you are buying one half of a duplex with no HOA, you will need a homeowners insurance policy that covers your half of the structure, including your half of the shared wall, up to the center line.
• If you are buying a townhouse, you will need to purchase a homeowners insurance policy that covers your unit and shared walls, up to the center line.
• If you buy an entire duplex (both halves), your insurance needs will depend on how those halves are used. If you live in one half and rent the other out, you'll need two policies: homeowners for the owner-occupied half and landlord insurance for the rental half. If you rent both, they can be covered under a single landlord policy.

Your mortgage company will tell you which type of insurance you are required to by as part of the loan contract.

What are the different types of condo policies, and how do I choose?

There are three basic types of condo insurance: bare walls, single entity and all-in or all-inclusive. Which of these you need depends on what your condo association master policy covers. Here's a quick breakdown of each:

• Bare walls. This type of condo policy covers everything in your unit from the walls in, including fixtures, flooring and appliances.
• Single entity. This type of condo policy covers upgrades and improvements to the interior of the condo, while the HOA covers original components.
• All-in/all-inclusive. In this case, your condo policy doesn't cover anything that is part of the unit; you only have to insure your personal property.

Note that all condo policies cover personal property and liability, regardless of what the HOA covers.

Methodology

Insurance.com commissioned condo and homeowners insurance rates from Quadrant Information Services across all 50 states and D.C.

Condo insurance rates are based on:

• $60,000 in personal property coverage
• $300,000 in liability coverage
• $1,000 deductible
• Good credit

Homeowners insurance rates are based on:

• $300,000 in dwelling coverage
• $300,000 in liability coverage
• A $1,000 deductible
• A 2% hurricane deductible in applicable states
• Good credit

Learn more about our data and methodology.

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