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All About: Condo Homeowners Insurance

By Dan Green

When you live in a condominium, you’re required to carry a special type of homeowners insurance made specifically for condo owners. The policy is formally known as HO-6, but it’s more commonly called Condo Insurance. Cover yourself, inexpensively.

What Is A Condominium?

A condominium is a home that’s in a building or community with other homes, with shared common areas such as gyms, parking garages, and hallways.

Condominiums are a style of homeownership.

Many condos are apartment-sized, which is why people say that living in a condo is like living in an apartment — except that you own your condo.

This is partially true because you own portions of the planned community, too.

If your building has an elevator, you have an ownership in the elevator. If your building has a yard, you have an ownership in the yard. This is how condo communities work. Everyone owns a share of all the common areas.

To manage these areas, owners of condominiums elect a Homeowners Association .

Homeowners Associations are groups of volunteers from within a condo building who take care of the common areas, and the people who live there.

The members of a Homeowners Association hire landscapers, elevator repair persons, painters, and anyone else required to keep the community running smoothly.

They also pay an insurance policy, known as a Condominium Master Insurance Policy , that covers the building from damage.

Master condo policies don’t cover individual units. They cover the common areas of a building only, such as the roof, the hallways, and grounds.

As a condo homeowner, you’ll need a different insurance policy to protect your unit. You’ll need HO-6 homeowners insurance , the technical name for “condo insurance”.

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What Is Condominium Insurance?

Condominium insurance, which is formally known as HO-6 insurance, is similar to homeowners insurance. It’s billed twice per year, you’re required to have it, and the policy pays out when your stuff is damaged or stolen.

Condo insurance also pays out when someone gets hurt in your unit.

Insurance for people getting hurt in your condo is known as personal liability coverage . Personal liability coverage is a built-in feature with condo HO-6 policies that keeps you protected you from the costs of somebody’s medical bills or a lawsuit.

Like all insurance policies, condo insurance can be customized for your life.

If you have a large jewelry or art collection, raise your personal articles coverage to make sure your items can be replaced. And, it’s always a good idea to have at least $1,000,000 in personal liability insurance.

If you don’t have personal liability insurance coverage, make sure you get it.

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What Does My Condo Association Insure?

HO-6 condo insurance is walls-in insurance; It’s protection for everything that happens inside your actual condo.

For everything outside of your unit, there’s the homeowners association’s master policy, which offers three levels of insurance coverage — minimal, standard, and extended.

Some of this coverage extends to the fixtures in your unit, which can save you money on your HO-6 policy. So, when you’re buying a condo, have your real estate agent pull the master condo policy first.

There are three main types of coverage offered by a master policy.

Bare Walls Coverage

Bare walls coverage is the most limited insurance coverage for a condo building. It’s also the cheapest master condo policy that a homeowners association can purchase.

Bare walls coverage covers the condo building’s structure and infrastructure only. Coverage does not extend into individual condo units.

When your building is insured with bare walls coverage, anything that breaks within your condo’s walls will be your responsibility to have fixed.

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Single entity

Single entity coverage is the standard-level insurance coverage for a condo building.

Single entity coverage covers the condo building’s structure and infrastructure; and all original fixtures in all of a building’s units.

When your condo building is insured with single entity coverage, repairs to your shower and plumbing are covered by the homeowners association’s master insurance policy.

Damage to your flooring from a leak is not.

All inclusive

All-inclusive coverage is the maximum level of insurance coverage for a condo building.

All-inclusive coverage covers the condo building’s structure and infrastructure; fixtures and upgrades within a building’s units; and the costs of a complete restoration from major events in the building.

When your condo building is insured with an all-inclusive master condo policy, you can save costs on your personal condo insurance policy.

So much is covered by the association that you only need a small amount of coverage for yourself.

5 Questions To Help You Shop For Condo Insurance

Every HO-6 condo insurance policy is unique. The amount of coverage that’s right for you won’t be the same as what’s right for your neighbor; or, for a person who owns a condo across town.

And, it makes sense to shop around . The cheapest condo insurance will depend on how you want to be covered.

Save money when you shop for HO-6 condo insurance. Know what you need, and what you don’t. Know what’s covered by your building’s master condo policy and make good choices.

Here are five questions to help you get the cheapest condo insurance available.

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1. If something went wrong in your condo, how much could you pay for the damage?

When something goes wrong in your condo, the costs can add up. Fixing your floors, repainting the walls, and replacing heirloom jewelry can be expensive, as examples.

When you make a claim for these damages, though, your insurer won’t send you all of the money you’ve requested. It will send all of the money minus some amount of cash.

This cash that’s withheld is known as a deductible .

The most common deductible sizes on a condo insurance policy are $250, $500, and $1,000. Your deductible is the amount that the insurer will deduct from your claim before sending it to you as cash.

If you are comfortable paying $1,000 for damaged floors that need repair, choose a high-deductible. It lowers your condo insurance rate, and can save you money.

Otherwise, opt for a smaller deductible. You’ll pay a higher rate, but you’ll get more cash in the event of catastrophe.

2. Do you have a lot of electronics to insure?

Electronics lose value pretty quickly, and insurance companies know that. So, if you’re insuring a lot of computers, televisions, and other devices, you can save money by insuring your items for their actual cash value.

This means that, over time, the cost to replace your goods will drop, which can help to lower the costs of a policy.

The opposite of an Actual Cash Value policy is what’s known as replacement coverage. Replacement coverage pays out the full price to replace the item with a similar, new item.

Replacement Coverage is more expensive as compared to actual cash value.

3. Do you own expensive things?

HO-6 condo insurance policies protect your personal items from damage or theft. Some condo homeowners, though, may find the built-in coverage to be too low.

For example, if you have a high-value jewelry collection, or a large collection of sports memorabilia, the standard coverage provided by your condo insurance may not be enough to actually replace your items of value.

If you own high-value items and keep them in your condo, have your insurance company raise your personal property coverage to a suitable amount.

This will raise your insurance premium slightly. The additional coverage, though, is necessary and important.

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4. Do you drive a car?

Insurance companies give discounts to customers with two or more active insurance policies. If you drive a car, then, use your auto insurance policy to get you a discount on your HO-6.

This is known as bundling .

The cheapest car insurance companies don’t always offer competitive condo insurance so be sure to shop for the lowest cost insurance you can find. Compare at least three quotes and offers.

Bundling insurance can save you 25% on your costs.

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5. Is this condominium in a flood zone?

Flooding is the most expensive and most common natural disaster in the United States, and it’s damage that’s not covered by an HO-6 condo insurance policy.

If your condo is in a flood zone, you’ll need special flood insurance — even if your condo is “off the ground”. Flood insurance protects your unit from damage to the building and its structure.

And, if you’re not in a flood zone, you may want flood insurance regardless — – more than 20% of U.S. flood damage happens in low-to-moderate flood risk areas.

Shopping For Condo Insurance

Shopping for condo insurance is simple and fast. You can talk to an agent by phone, or shop for rates online.

Insurance rates vary by company, so make sure to check with three insurers, at minimum — especially if you’re planning to save money by bundling your auto insurance with your condo insurance.

Click here to get a condo insurance quote now.

Written by Dan Green

Dan Green is a mortgage lending expert and the founder of Growella. Prior to Growella, Dan was a six-time, top-producing loan officer; and, ranked repeatedly among the top 1% of loan officers nationwide. Dan's home buying expertise has been in print and on TV with The Wall Street Journal, NPR, Forbes, CNBC, and others.

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