Homeowners and condo insurance are similar in that they protect both your living space and your personal belongings, and also offer liability coverage for injuries in your home. However, homeowners’ insurance extends to the exterior of your home and the rest of your property, including other structures. If you own a condo, that’s all covered by the association master policy instead.
Below, we’ll take a closer look at condo insurance vs homeowners insurance to see how they’re alike and how they differ.
Key Points
• Homeowners and condo insurance both protect living spaces and belongings with liability coverage, but homeowners’ policies cover exterior structures while condo associations provide master policies.
• Condo associations carry master policies covering shared spaces and building components like roofs, pools, elevators, and lobbies, with costs funded through maintenance fees.
• Dwelling coverage differs significantly between the two: homeowners insurance protects entire property structures, while condo insurance covers only interior units with lower limits.
.• Liability coverage scope varies based on property type: homeowners insurance applies anywhere on the property, while condo coverage is limited to unit interiors..
• Loss assessment coverage is a unique optional condo insurance endorsement that protects owners when associations issue special assessment fees for unexpected expenses.
What Is Homeowners Insurance?
Homeowners insurance provides financial protection in the event your home is damaged by a covered peril, such as fire, wind and hail, falling objects, or theft and vandalism. According to the Insurance Information Institute, a typical homeowners insurance policy covers:
• Damage to the structure of your home (and other structures on your property)
• Damage to your personal belongings
• Liability protection in the event a guest is injured on your property
• Additional living expenses if you temporarily cannot live in your home
Standard home insurance policies typically have key exclusions, including damage from floods and earthquakes. These require additional policies.
In the event of a covered event, you’ll submit a claim and pay a deductible before coverage kicks in. Deductibles and coverage limits vary by insurer and individual policy.
Most lenders require you to carry a homeowners insurance policy as long you still have a mortgage. Even without a mortgage, homeowners insurance is a smart move for most homeowners, as it protects you financially against a total loss of your home.
Recommended: What’s the Difference Between Homeowners Insurance and Title Insurance?
What Is Condo Insurance?
Condo insurance includes two types of policies: the association master policy and the individual policy.
• Master policy: The condo owners’ association (COA) is responsible for carrying a master policy. This covers damage and liability in shared spaces and building components, such as the roof, pool, elevator, lobby, and walkways. While you don’t pay for this policy directly as a condo owner, your condo maintenance fees or association dues help cover the cost.
• Individual policy: Lenders and condo associations typically require condo owners to carry their own individual policy, which covers the interior of your condo and any other structural components not covered by the master policy. Like home insurance, condo insurance also includes coverage for personal belongings, liability protection, and additional living expenses, when needed.
Key Differences Between Condo Insurance and Homeowners Insurance
Both condo insurance and homeowners insurance protect you financially against covered losses to your home, but what they cover is a little different. Let’s look at each core difference for condo insurance vs homeowners insurance.
Dwelling Coverage and Other Structures Coverage
A standard home insurance policy includes dwelling coverage and other structures coverage.
• Dwelling coverage protects you if there is covered damage to the physical structure of your home, such as the roof, walls, foundation, floors, ceilings, built-in appliances, fixtures, plumbing, electrical, and HVAC. Attached structures, such as porches, decks, and garages, are included.
• Other structures coverage protects you if there is covered damage to—you guessed it—other structures on your property. This includes detached garages, sheds, greenhouses, gazebos, and even fences.
Condo insurance also includes dwelling coverage, but the coverage limits are typically much lower, as it only applies to the interior of your condo. The exterior and other structures on the condo association property are covered through the master policy.
Personal Property Coverage
Both standard home and condo insurance policies protect your personal belongings in the event they’re damaged by a covered event or stolen. There’s no real difference between these coverages, but condo owners need to remember that the master policy does not protect their personal belongings.
Liability Protection
A key component of homeowners’ insurance is liability protection. If someone is injured on your property and sues you, liability protection covers your defense and any court awards or fees. The protection also includes no-fault medical coverage for the injured party.
Condo insurance also includes liability coverage, but it only applies to injuries caused inside your condo unit. While homeowners’ insurance liability coverage applies anywhere on the property—in the house, on the roof, behind the shed, you name it—condo insurance is much more limited. That’s because the rest of the condo grounds are covered via the master policy.
Association Master Policies and Loss Assessment Coverage
The condo association carries a master policy to cover damage and liability in shared spaces. Though condo owners don’t pay for this outright, the premium is most certainly covered by condo dues and maintenance fees. Homeowners don’t have such policies; rather, their standard home insurance policies extend to all corners of the property.
Another unique hallmark of condo insurance is loss assessment coverage. This is an optional coverage (endorsement) that protects condo owners in the event the condo association issues any special assessments.
Condo associations may issue special assessments to condo owners when the master policy isn’t enough to cover repairs or liability-related costs after a covered event, or to help pay a large deductible before coverage kicks in.
For instance, if a fire destroys part of the condo lobby and elevator, and the repair costs total $250,000, but the policy limit is only $200,000, the condo owners’ association still owes $50,000. The COA can pass that cost on to the condo owners, divided evenly by the number of owners. If there are 10 owners, each must pay $5,000. Loss assessment coverage would pay that amount on behalf of the condo owner (after a deductible).
What Condo and Homeowners Policies Have in Common
Thus far, we’ve been focused on condo vs. home insurance, but the truth is: These policies have so much in common:
• Both offer coverage for damage to your dwelling.
• Both offer coverage for damage to your personal belongings.
• Both offer liability coverage in the event someone is injured at your home.
Where they differ is the extent: Homeowners must insure their entire property, while condo owners must only insure their unit. The rest of the condo grounds are covered by the master policy.
When You Might Need Condo Insurance
If you own a condo, you should almost always carry condo insurance.
• Lender requirement: If you have a mortgage on your condo, your lender most likely requires that you carry condo insurance.
• COA requirement: Many condo owners associations may also require condo owners to carry insurance.
• Financial protection: Even if you aren’t required to carry the insurance, it’s in your best financial interest to do so. It protects you against major property damage and liability claims, which can cost hundreds of thousands of dollars.
When You Might Need Homeowners Insurance
Similarly, you should almost always carry homeowners insurance if you own a home.
• Lender requirement: As with condos, if you have a mortgage on a home, your lender probably requires you to carry home insurance.
• Financial protection: Even if your lender doesn’t require you to carry the insurance or you’ve paid off your home, carrying a home insurance policy is the best way to protect your home financially.
• Special coverages: If you live in a high-risk flood zone or a place with frequent earthquakes, you should also consider carrying additional flood insurance and earthquake insurance policies. In fact, if you live in a special flood hazard area (SFHA) and still have a mortgage, you’re legally required to purchase flood insurance.
The Takeaway
Homeowners insurance and condo insurance are two different policies for two different purposes. If you own a home, you should carry home insurance. And if you own a condo, you should carry condo insurance. That said, they both function similarly, protecting you financially in the event your dwelling or personal belongings get damaged or someone gets injured on your property.
Want to learn more about home insurance coverages and how to choose the best policy? Check out SoFi’s comprehensive homeowners insurance guide.
If you’re a new homebuyer, SoFi Protect can help you look into your insurance options. SoFi and Lemonade offer homeowners insurance that requires no brokers and no paperwork. Secure the coverage that works best for you and your home.
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FAQ
Does condo insurance cover damage to balconies or patios?
Individual condo insurance does not cover damage to balconies or patios; rather, it only covers the interior of your unit. That said, the condo association master policy covers elements such as walkways, patios, balconies, roofs, and shared spaces within the community.
How does a condo association’s master policy affect individual coverage?
A condo association’s master policy and an individual condo policy are two halves to a whole. The master policy protects against damage to and injuries within shared spaces; the individual condo policy offers coverage for damage to the interior of the condo unit itself, as well as coverage for personal belongings and liability protection within the unit.
Are special assessments covered under condo insurance?
A standard condo insurance policy does not cover the cost of special assessments. Instead, condo owners should consider adding loss assessment coverage as an endorsement to their policy.
Can homeowners insurance cover detached structures like guest houses?
Homeowners insurance covers more than just your physical dwelling. A core component of a standard policy is “other structures coverage” (Coverage B), which covers any other detached structures on your land, including guest houses, sheds, and gazebos.
Do both policies cover water damage from plumbing leaks?
Water damage from plumbing leaks is not always covered by insurance. If the leak is sudden—e.g., due to a frozen or burst pipe—homeowners and condo insurance should cover the resulting damage. However, if the plumbing has been slowly leaking and you’ve ignored it, and over time it’s led to mold and mildew growth, the remediation costs will not be covered.
Photo credit: iStock/Nuttawan Jayawan
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