Home Insurance vs. Condo Insurance

Home Insurance vs. Condo Insurance

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When it comes to insuring a house or condo, policies typically cover most of the same things but differ in coverage when it comes to the structure of the home. In this piece, we will analyze in depth all the differences between homeowners and condo insurance.

What's the difference between homeowners insurance and condo insurance?

The main difference between house and condo insurance comes down to the parts of the home you own.

When you own a house, you own everything inside the house, its structure and even the land on which the house sits. When you own a condo, on the other hand, you are only responsible for the space within your walls.

Everything else — hallways and common areas, for example — is usually covered by a collective homeowners association insurance policy.

How does dwelling coverage differ?

How dwelling coverage affects structures located outside the home is the main difference between home and condo insurance. Dwelling coverage in a home insurance policy covers your physical home: the walls, the roof, ceilings, floors, etc. It also covers outside structures like pools, sheds, garages and fences.

Homeowners are responsible for any physical structure on the land their home sits on. Condo owners, on the other hand, do not have this responsibility. Your complex may have a fence and a pool, but it will actually be the condo association or homeowners association's insurance that will cover damage in those areas.

As a condo owner, your dwelling coverage just has to be enough to cover damage that can happen inside your home. For example, if a fire breaks out in your condo, destroying the kitchen, you would need insurance to pay for the damage.

Read your condo association's insurance policy

Every condo complex will have its own insurance policy that will cover damage to common areas such as pools, hallways and parking lots. In certain complexes, the policy may even extend to the interior of your home.

When you first move into your condo, you should parse through the policy with your insurance agent to see exactly what is covered by your condo association's plan. Sometimes the building policy will cover your home as it is originally built, leaving you only needing to cover improvements to the home.

For example, if you installed new cabinets, which raised the value of the home by $10,000, you may only have to cover the extra $10,000. In other cases, your condo association policy may not cover your kitchen or any other part of the home besides the ceilings, walls and floor.

It's incredibly important to go through your association's plan in thorough detail so you know how much condo insurance you need. If you get coverage that overlaps with your association's policy, you will be spending more on insurance than you need to. On the other hand, if you are underinsured, you can end up spending thousands on damage you're not covered for. If you are still unsure after reading the policy, we encourage you to talk to an insurance professional for advice.

How does liability coverage differ?

As an owner of a house, you typically open yourself up to more liability risk than a condo owner because of the extra structures you own. People can get injured inside and outside your home — in your backyard or pool, or on a trampoline, for example. The liability coverage portion of a home property insurance policy is meant to shield you from litigation from people who are injured inside your home and outside of it.

For condo owners, anyone injured in common areas — like the complex's pool — would be covered by the complex's liability insurance. So even if you were to invite a friend over to swim in your building's pool and they injured themselves, the financial responsibility would fall on the building.

As a condo owner, you could get away with less liability coverage, but we would still recommend you have the same amount of liability insurance as you would if you owned a house.

You never know how expensive someone else's injury can become after medical and legal fees. We always advise people to have enough liability protection to equal the total amount of assets they are currently holding or are likely to hold in the future.

How does personal property protection differ?

The percentage of your overall coverage for personal property protection will likely differ between the two policies. Standard homeowners policies are usually insured for 25% to 50% of your dwelling coverage. Typically, a policy with $250,000 of dwelling coverage would have $100,000 of personal property protection. Your condo likely won't need $250,000 worth of dwelling coverage. However, you may still need $100,000 worth of personal property coverage. It all depends on the value of your personal property inside your home.

Feel free to adjust your condo personal property limits to reflect the true value of your possessions because your complex's insurance policy is unlikely to cover any of your personal possessions. We always recommend that people make an inventory of their most valuable objects and jot down their likely value. This will help in the event of a disaster where you need your stuff replaced since you'll have it ready for the insurance company when you file your claim.

Cost of homeowners and condo insurance

The cost of homeowners insurance is usually three times as expensive as a policy for a condo owner. You do not need as much dwelling coverage for a condo, so that dramatically cuts down on the price of a policy. We find the average cost of homeowners insurance to be $1,516 per year. For condo and co-op insurance, you should expect prices to fall to around $400 to $600.

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