When it comes to buying a home or a condo, a big difference between the two of them lies in the type of insurance and how much of the property has to be insured. When you purchase a new home, you are responsible for insuring not just everything inside of it, but the property it sits on as well. However, with condo ownership, you are typically only responsibility is to ensure you insure the inside of your home.
Condo ownership is different than home ownership in that the condo building structure, the outside property and the common areas of the building are generally owned jointly between you and other condo occupants and the insurance for these areas are provided through your homeowners association (HOA). And, since owning a condo does come with different responsibilities, you wouldn’t want to set up your insurance for your condo the same as you would with insuring a house.
Difference Between Condo and Homeowner’s Insurance
There are some key differences between condo insurance and homeowner’s insurance.
When you own a condo, it’s actually only the unit itself that you own, which is only a part of the entire complex or structure. You have a deed entitling you to this private living area as well as the “common areas”, like clubhouses, pools, entrances and so forth, which you and your guests enjoy. In a complex that has say 10 condos (private living areas), you would hold the deed on one of the condos (the one you bought) and based on the deed’s provisions, you would be the owner of that one condo as well as hold a designated “share” of the common areas.
Insurance for a condo generally covers your furniture, appliances, bathroom and kitchen amenities, wall decor, the walls within your condo and your personal belongings. Any upgrades you make to your condo, such as installing ceiling fans, lighting, wood floors, plush carpeting or built-in wall units, would also be covered. Permanently attached items of your condo like cabinetry, attached appliances and interior walls are your responsibility to insure so make sure you get enough coverage for them.
Now, a standard condo policy will typically provide you with more coverage than this. For instance, a standard condo insurance policy (sticking inside your limits) may also cover you for:
- Personal property like your computers, furniture, televisions and artwork that has been damaged or stolen in a burglary or other covered peril.
- Loss assessments for any of the common property of the entire complex community that is a covered peril and you are billed by the association for repair costs.
- Any damage you cause to another person’s property.
- Temporary housing costs for a covered loss that keeps you from being able to live in your condo.
- A guest’s medical payments from an injury they sustain on your property.
You may also be able to obtain additional coverage if needed.
One thing to take note of is that condo insurance is not the same thing as renter’s insurance. This is because they are different types of property. Although you do get coverage from both types of policies for legal liability and personal belongings, there are unique circumstances when you own a condo that you get coverage for that you wouldn’t with renter’s insurance which can be discussed with your insurance agent.
Your standard homeowner’s insurance policy, say for a single-family dwelling, can be as simple or as comprehensive as you need it to be depending on what your lender of your mortgage allows. The standard homeowner’s insurance policy for a single-family dwelling will generally cover the entire structure of your home, as well as the construction materials like the cabinets in your kitchen and other permanent structures. Your personal property is typically covered as well along with other structures like sheds, detached garages, and such.
Filing Condo or Homeowner’s Insurance Claims
Filing an insurance claim for a single-family dwelling or similar is pretty straightforward, and you file the claim directly to your insurance company. But, if you own a condo and are looking at a claim, your situation will decide whether your insurance pays the claim or if HOA does. For instance, if you have burst pipes that cause water damage on the outer wall of your condo; this would be the responsibility of HOA. However, if it was a kitchen sink pipe that caused water damage, your own insurance would cover that.
Finally, another big difference between condo insurance and homeowner’s insurance is the premium. Condo insurance generally has much lower premiums than homeowner’s insurance, but that does depend on the value and size of your property. You can go over the details with your insurance provider.