Buying a condo comes with a question many first-time owners do not expect: if the building already has insurance, why do I need my own? The answer is that the building’s policy and your policy protect different things. The association insures the shared structure, while the inside of your unit, your belongings and your personal liability are usually left to you. That is the gap condo insurance is designed to fill.
Below we compare the two policies, walk through what a unit owner’s policy includes, and list the questions worth asking your association before you choose your coverage.
Master Policy vs Your Own Policy
Every condo association carries a master policy, but what it covers varies from building to building. The table below shows the typical split.
| Association master policy | Your condo policy | |
|---|---|---|
| Building exterior and roof | Usually covered | Not needed |
| Hallways, lobby, gym and other common areas | Usually covered | Not needed |
| Interior walls, floors, cabinets and fixtures in your unit | Depends on the policy type | Covered under dwelling (walls-in) |
| Your furniture, clothes and electronics | Not covered | Covered under personal property |
| Somewhere to stay if your unit is unlivable | Not covered | Covered under loss of use |
| Injuries to guests inside your unit | Not covered | Covered under liability and medical payments |
Because master policies differ so much, an HO-6 policy should be sized after you have read your association’s documents, not before.
What a Unit Owner’s Policy Includes
Dwelling coverage, from the walls in
- Protects the parts of the unit you own, such as interior walls, flooring, cabinets and built-in fixtures.
- The amount should reflect the cost to rebuild the unit if it is damaged or destroyed.
- Worth increasing if you have upgraded the kitchen or bathrooms since moving in.
Personal property coverage
- Covers your belongings, from the sofa and bed to clothing and gadgets.
- Applies to theft as well as damage from events such as fire or a burst pipe upstairs.
Personal liability coverage
- Helps pay legal and medical costs if someone is hurt at your place and sues you.
- Also relevant if water from your unit damages a neighbor’s ceiling below.
Loss of use coverage
- Covers added living expenses such as a hotel, takeout meals, parking and laundry if a covered event makes your unit unlivable.
- Particularly useful in a building where repairs to shared pipes or walls can take weeks.
Medical payments to others
- Helps pay medical bills if a guest is injured in your unit, even for a minor accident.
Together, these five parts mean that a burst pipe, a kitchen fire or an accident with a guest is handled by one policy instead of several separate conversations. For most owners the biggest decisions are the dwelling limit and the amount of liability, since those carry the largest potential costs.
Questions to Ask Your Association
- What type of master policy does the building have? Some cover only the bare structure, others include original interior fixtures.
- What is the master policy deductible? If a claim affects your unit, you may be asked to contribute toward it.
- Who is responsible for pipes inside the walls? Water damage is one of the most common condo claims, so know where the boundary sits.
- Do the bylaws require a minimum amount of coverage? Some associations and mortgage lenders set one.
- Have I made improvements since buying? Upgrades are usually your responsibility to insure.
Once you have the answers, choosing limits for your condo owner insurance becomes a matter of filling the gaps rather than guessing. It also helps to install smoke alarms and other safety features, which can bring the premium down, and to keep an up-to-date list of your belongings in case you ever need to make a claim.
The Bottom Line
The master policy protects the building; your own policy protects your home inside it. Read the association documents, match your dwelling limit to the cost of rebuilding your unit and make sure liability and loss of use are included. That way, a leak from upstairs or a fire down the hall will not leave you paying for repairs, a hotel and a new sofa out of pocket.
Condo cover built around the walls-in approach is available from Lemonade. For more practical reads on home, money and lifestyle, head over to TheVougeClub.
