Condo insurance and homeowners insurance are very similar in that both provide the owner with coverage for the inside of the home, and their personal property, as well as protection for personal liability.
The difference between the two policies is how they handle insuring the structure of the home.
HO3 vs. HO6
A homeowners insurance policy – or HO3 policy – covers both the outside and inside structure of the dwelling.
By contrast, condo insurance – or an HO6 policy – usually only covers the inside of the individual unit. In most cases, your condo association's insurance will cover the exterior of the building, common-use areas, and the condo building surroundings.
A condo association's master policy can be one of two types – an “all-in” policy which covers the fixtures of your condo, such as carpets and fitted appliances, or a “bare walls-in” policy, which does not cover anything within the walls of your condo.
Please note: What’s generally covered under a condo insurance policy really depends on your condo association's master policy.
Building property
Condo policies typically cover the interior of the property including wall coverings, floor coverings, ceiling coverings, and built-in furnishings that are considered for your sole use and not that of other condo owners (e.g., cabinetry).
Personal property
Personal property insurance covers your personal belongings inside the condo, such as furniture and clothing. Limits may apply and you might need to purchase additional coverage for high-value items, for example, artwork and jewelry.
Personal liability
Your personal liability coverage protects you if someone is injured on your property or you damage someone else’s property and are found to be liable. Such coverage includes legal fees and medical expenses where applicable. The liability coverage works in tandem with your condo owners association’s insurance which covers common area liability only.
Loss of use
In the event that your condo becomes uninhabitable as a result of a catastrophe, your insurer may cover the relevant increased costs related to alternative accommodation, such that you and your family can continue to maintain your current standard of living.
Can you write a condo on an HO3?
As mentioned, traditional homeowners and condo insurance policies have similarities. Both can cover the owner's belongings and provide liability protection. However, the differences prevent insurers from writing condo insurance on an HO3 policy form. This is why HO6 policies exist for condo owners.
The key difference between homeowners and condo owners is that condo owners aren’t responsible for the exterior structure of their condo. This responsibility typically falls on the condo association.
Using an HO3 policy to insure a condo would create redundant coverage on the structure. An HO6 policy covers the contents of a condo and not the structure, making it the better choice for condo owners.
There are nuances to an HO6 policy that can add to the comfort level of condo owners.
Benefits of an HO6
Interior improvements
Interior alterations and improvements, fixtures and built-in cabinetry, and appliances can be covered under an HO6. While they may be located on the premises, they’re not always part of the structure or building.
Exterior air conditioning units
Items intended exclusively for a specific condo's use are typically covered by an HO6. This includes items like a rooftop air conditioning unit serving only one unit.
Items the condo owner is solely responsible for
Anything that the condominium association documents say the unit owner is responsible for, and items that are the sole responsibility of the owner. For example, if your association’s master policy or bylaws say you’re responsible for insuring your garage space, then your HO6 policy likely covers it.
In contrast, an HO3 provides coverage for the entire dwelling.
How do you know which policy is right for you?
When deciding the type of condo insurance you require and the value to be covered, it’s worth speaking to your condo association to understand the level of protection you are afforded under their specific master policy. Even better? Request a copy of the condominium bylaws and master policy to make sure you’re only purchasing the insurance you need and that you’re not under-insuring your property.
We encourage homeowners (and condo owners) to learn about their insurance. The more you understand about your insurance, the better you can protect your property.
