Most of the time, we think of insurance as something that protects us from the unknown: what if you get into a car accident, or your house burns down?

Did you know that your condo association has insurance coverage for those emergency situations? In many cases, that insurance coverage is just as comprehensive as what you would get from a standard policy. But that doesn’t mean that you’re automatically covered.

Are you fully covered? Let us help you figure that out.

What Is Condo Insurance?

At its most basic, condo insurance – also known as an HO-6 insurance policy – provides protection against damage to your condo and its contents caused by fire, smoke, theft, and vandalism. In fact, your lender will require it before approving your home loan.

Your condo insurance can even cover additional living expenses. Some of these expenses can include:

  • If you’re forced to live elsewhere while your condo is being repaired
  • Legal fees for accidents
  • Moving costs if you have to relocate

Your condo insurance policy (HO-6) is going to be very similar to a homeowners insurance policy (HO-3) but you won’t need both.

One difference with condo insurance is that you will also have some added coverage options. For instance, if you were to experience a flood, a separate policy might be needed to cover the damage from the water.

In the same vein, you may be able to buy additional coverage to cover your liability if someone were to get hurt on your property.

What Does a Condo Association Insurance Policy Cover?

Your condominium building is probably covered under “master insurance policies” purchased by the condo association or homeowners association (HOA) unless stated otherwise by the bylaws.

You can think of condo association insurance as a policy that covers damages to the common areas of a building that is owned by a condo association.

This could include the roof, the exterior walls, the hallways, the elevators, the exterior doors, and the common areas.

It’s important to remember that this type of policy usually does not cover the units inside the building.

Here’s a more comprehensive list of what your condo association insurance could over:

  • The property protection of a condo association insurance policy could cover damages to the common areas of the building that you share with all the other residents such as the roof, the exterior walls, the hallways, the elevators, the courtyard, and the exterior doors.
  • The liability protection in a condo association’s policy could also cover legal or medical costs if the association is hit with a lawsuit from people getting injured in a common area that is maintained by your association.
  • In some cases, the Insurance Information Institute (III) states that the association’s insurance could protect the bare walls, floors, and ceiling of your condo unit. You would often be responsible for using your individual condo insurance to pay for things like the kitchen cabinets, appliances, bathroom fixtures, and plumbing or wiring.

Another way to determine what your specific condo association’s master insurance policy covers is to ask what kind of policy they have. There are 3 main types of condo master insurance policies:

  • Bare walls coverage – This is a limited policy that covers the structure, furnishings, and most fixtures in a condominium’s common areas. This also usually covers any property that is owned by the condo association.
  • Single entity coverage – This covers everything that is included in bare walls coverage as well as coverage for built-in property such as fixtures in your individual condo unit.
  • All-in coverage – This applies to either all properties owned by your condo association or all properties part of a condominium structure. This is the most comprehensive condo master insurance because it covers condo improvements and additions.

Knowing what your condo association covers already can help you decide what type of condo insurance HO6 you need for your specific unit.

What Does Condo Insurance Cover and Not Cover?

As a condo buyer, it’s important to consider how condo insurance can help protect your home and your loved ones.

Condo Owner Insurance HO6 Covers:

  • Dwelling coverage – the interior of your unit
  • Personal property coverages – damage or theft of your personal belongings
  • Personal liability coverage – legal fees and medical payments if guests are injured in your home
  • Loss of use coverage – living expense coverage if your condo becomes uninhabitable
  • Loss assessment coverage  – your share of a loss assessment that the association charges all condo owners if there is damage to a common area or building exterior

What Condo Owner Insurance Does NOT Cover

  • It doesn’t cover the damages to the exterior of the building or the common areas of the condo
  • It doesn’t cover damage from floods, earthquakes, or hurricanes
  • Condo insurance also does not cover damages sustained by events that are not covered by your home insurance

Types of Condo Insurance

The types of condo insurance you need to be aware of are your own condo owner insurance HO6 policy and the master insurance policy that your condominium association pays for.

Remember: If you own a condo, you would NOT need a homeowners insurance policy HO3.

This is because, as a condo owner, you’re usually only responsible for the interior of your unit and your personal property – not the exterior.

You would be responsible for choosing and paying for your condo insurance HO6 policy. The condo association will pay for the master policy that covers the exterior building as well as shared spaces.

Is Condo Insurance Required?

Just like with homeowners insurance HO3, condo insurance HO6 is usually required by your mortgage lenders so that their financial interest is protected for your loan period.

“Is condo insurance still required even if I paid off my mortgage?”

Oftentimes, yes. Even if you’ve paid off your mortgage and purchased your property from the beginning, many homeowners associations (HOAs) require it.

How Much Condo Insurance Do You Need?

To determine how much condo insurance HO6 you need, you need to know how much the condo is worth.

You can use an appraisal service or a condo insurance coverage calculator to determine how much your condo is worth.

How Much is Condo Insurance?

According to the 2018 National Association of Insurance Commissioners data, the national average condo insurance cost is $506 per year.

In Illinois, the average cost of condo owner insurance is about $398.

Your insurance policy rate could vary widely depending on your condo’s location, condo association rules, the value of your personal belongings, and the deductible you choose. Because of this, it is sometimes best to use a condo insurance coverage calculator.

How to Save on Condo Insurance?

The best way to save money on condo insurance rates is to shop around at least 3 different condo insurance companies for the coverage you want.

This is so that you can get a better understanding of the condo policies and coverage limits each insurance company provides before making the best decision for yourself.

There might even be discounts available if you bundle different types of insurance with the same company. For example, bundling a condo owner insurance policy and auto insurance policy from a single insurance company or insurance agent.

Another way to save money is to get an insurance policy with a higher deductible. If you go with this option, you should make sure that you have enough savings to pay that higher deductible amount if a disaster or emergency occurs.

Additional Read: 10 Questions To Ask For When Buying A Condo

Contact A and N Mortgage Today

If you own a condominium in a common interest development, you may have heard that your condominium association has an insurance policy.

But are you fully covered? In short, yes. But the condo association is usually only responsible for the exterior and shared areas of their properties. You would be responsible for the interior and liability coverages of your own unit.

We all know that buying a condo is not an easy task. Not only do you have to come up with a large sum of money, but you also have to deal with all the paperwork.

The entire process is not only time-consuming but also confusing.

At A and N Mortgage, we have a team of experts whose job is to make sure that your loan is processed as quickly as possible. By having our own underwriting department, we are able to settle on the loan amount, interest rate, and the terms of your loan quicker and without any trouble.

If you need help with your home buying experience, we are here to help! Contact us today.

A and N Mortgage Services Inc, a mortgage banker in Chicago, IL provides you with high-quality home loan programs, including FHA home loans, tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

About The Author

Neena Vlamis, President of A and N Mortgage

Hi, I’m Neena Vlamis and I am the President and Owner of A and N Mortgage. I have ranked in the Top 200 per Scotsman Guide Magazine for many years in a row and have been a Five Star winner consecutively for the last thirteen years. My razor-sharp focus has led the company to an A+ Better Business Bureau rating since its inception.

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