Condominium owners essentially carry two types of insurance: homeowners' association insurance and condominium insurance. Typically, condominium owners join a homeowners' association (HOA) when they purchase their condo. This group of property owners in a shared-space environment is responsible for buying insurance to cover all the common areas of the development, as well as building exteriors.
One benefit of being a condo owner is that the HOA insurance usually covers risks traditional homeowners must directly insure against, including damage to the outside of the building. Coverage for items not included in the HOA master policy, such as damage to interior structures, fixtures, and even appliances, is offered through condominium insurance.
Generally speaking, HOA insurance covers everything outside a condominium owner’s unit, while condominium insurance covers everything inside the unit.
Homeowners Association (HOA) Insurance Coverage
Sometimes called a condo master policy, HOA insurance comes in two forms: studs-out coverage, and all-in. Studs-out coverage means that the policy steps in for basic building incidents, such as a broken elevator or a damaged roof. Anything within your condo, including structural issues concerning the walls or the floor, would be your responsibility as the condo owner.
By contrast, all-in coverage protects the basic building and common areas as well as structural elements and fixtures in your own condominium. While you would still need individual coverage against property damage, it would mainly be for your personal belongings, since property inside your condominium would be covered.
Examples of typical HOA insurance coverage include property damage to exterior structures, land, and common areas. For example, in a smaller condo complex, damage to a lobby would be covered by the HOA policy. Liability in these outside areas is usually covered as well. In a large townhouse community, liability for an injury in the community pool may be covered by the HOA policy. Cases of severe damage may exceed the limit provided by the HOA policy. In this situation, condo owners could be responsible for the difference.
Condominium Insurance Coverage
A condominium insurance policy, or unit owner coverage, should provide coverage for anything not included in the HOA master policy. For example, if your HOA policy is “all-in,” it still may not cover improvements made to your unit, and it likely will not cover your personal belongings. If your HOA policy is studs-out, estimating the amount to replace flooring, lights, and cabinets may help you determine the amount of condo insurance you need.
Most condominium insurance policies cover your valuables and liability. Interior structures are included in condo insurance policies, and many condo owners do not realize they own the flooring, countertops, and fixtures of their units. But the outside components of a condo unit, including walls and ceilings, typically fall under the master HOA policy.
Where Coverage Ends
Read the HOA’s bylaws or the HOA insurance policy to determine where coverage ends and what kind of condominium coverage may be necessary.
Renovations and improvements made to the unit are also covered by condo insurance. There are a variety of covered risks that condo insurance can protect the unit against, including fire, theft, vandalism, weight of snow, and other risks. Other types of coverage, including personal liability and identity theft, are sometimes offered through condo insurance policies. Sometimes HOA plans require that condo owners maintain a certain condo insurance coverage, even specifying which company to buy coverage from.