Condo Homeowners Insurance – Home buyers choosing between single-family homes and condos are often faced with a laundry list of “must-have” items. Insurance should be high on that list, as the protection of each residential property will differ depending on what type of home you choose.
This is the case with homeowners or condo/co-op insurance. In fact, there are significant differences between the two asset models and types of coverage.
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1. Homeowners insurance is a form of property insurance that covers loss and damage to a person’s residence, as well as furniture and other assets in the home.
“Homeowners insurance provides liability coverage for accidents at home or on property,” said Tyler Forte, chief executive officer of Felix Homes, a real estate services firm based in Nashville, Tenn.
2. Co-op insurance is a type of property-liability insurance that covers loss and damage to the owners of the co-op.
“These policies usually cover loss to their building or individual components,” Forte said. Another difference between home owner insurance and insurance for your apartment is the structure of the property purchased.
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“Homeowner’s insurance is where the owner lives and is responsible for the entire structure,” said Greg Martin, president of Think Safe Insurance, LLC in Brandon, Florida. “These are usually covered by specific home insurance policies.
Co-op or condo insurance can cover residential units in a building or owner-occupied units, part of a building, under an association or master policy.
“These are usually covered by a specific policy and can be owner-occupied or rental units with specific approvals,” Martin said. “Whether townhomes require a policy depends on whether the association covers anything and what type of policy the owner carries.”
The differences between homeowners and condo insurance go even deeper. Here are the key differences between the two:
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1. For Single Owner and Multi-Owner: Home insurance is for single-family homes, which is completely different from a co-op insurance policy.
“A co-op insurance policy is designed to cover the building, the common areas and sometimes the individual units of the multi-unit building owned by the owner of the building,” said Earl Jones, founder of Earl L. Jones. Sunnyvale, California. “A homeowner’s insurance policy is owned only by the homeowner, while co-op insurance is owned by all unit owners.
2. Co-op insurance doesn’t cover a lot of ground: Another big difference between standard homeowners insurance and co-op insurance is dwelling coverage.
“In most cases, co-op building owners have room to take care of common areas such as exterior structures and hallways,” Forte said. “Like homeowners insurance, co-op insurance covers items in a separate unit, including interior walls, fixtures, personal property and liability exposure.”
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3. No personal insurance coverage for co-op owners: A co-op may limit liability coverage to common areas only, making unit owners responsible not only for their own personal liability, but also for the liability of their guests, pets and children.
“That’s not the case with a homeowner’s insurance policy, which covers the entire home and liability,” Jones said.
4. The cost is also different: The cost of homeowners insurance and co-op insurance depends entirely on how much coverage you need.
“If you have a $1,000,000 house full of furniture, expect to pay significantly more than someone with a sparsely furnished $200,000 co-op,” said Lamar Brabham, CEO and founder of The Noel Taylor Agency. A service organization in North Myrtle Beach, South Carolina. “On average, however, a co-op policy costs about $475 a year, and a homeowners policy is about $1,500 a year.
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With different amounts of coverage, it’s important to shop around to find the right home insurance plan that fits your needs. Visit Credible to start the process and maximize the value you get from your homeowner’s policy.
Buying a homeowners or co-op insurance policy requires some unique features – and that means doing some solid due diligence.
When it comes to home insurance, consolidate insurance as much as possible. “In most cases, combining the home and the car gives people the best rates,” Jones said.
Study the Master Co-op insurance policy. “Individual co-op unit owners need to know what is covered in the master co-op policy,” Jones said. “Don’t assume this includes the interior of individual units. Often, there is no room in the master plan to rebuild the interior of their unit in the event of extensive damage, forcing the unit owner to pay out of pocket.
Condo Vs. Homeowner’s Insurance
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Have a finance-related question but don’t know who to ask? Email a Credible Money Expert at [email protected] and your question may be answered by Credible in our Money Expert column. There are many options to consider when deciding which type of home is right for you. Many people who want to stay close to the city or live in a community environment buy houses because it gives them the opportunity to own a property that best suits their lifestyle.
When buying a condo, making sure it is adequately protected by a comprehensive insurance policy is a critical part of smart financial planning and protecting your investment. Below, we break down what HO-6 insurance is, what coverage you can expect to receive, and any add-ons available to extend your policy.
HO-6 insurance (commonly called condo insurance) is a policy created specifically for homeowners because it covers the interior structure of your condo as well as your personal belongings and liability. When used in conjunction with your building owner’s insurance plan, you can get complete coverage for every aspect of your apartment. Before purchasing condo insurance, it’s important to check what your homeowners association or building owner covers so you don’t buy coverage or file a claim for items and structures you’re not responsible for repairing.
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Often called “wall” coverage, HO-6 insurance works by filling in the gaps that your condo association doesn’t cover in their insurance plan. By protecting against any damage to your internal structure, personal property, liability and additional living expenses, home insurance offers comprehensive protection against standard home issues such as lost items or damaged walls.
Under a typical home insurance plan, your interior structure (Coverage A) is the open risk policy, while your personal property (Coverage C) is covered under the named risk policy. This means you are only covered for events specified in your policy, which include damage from fire, smoke, theft, burst pipes, wind, hail, lightning, explosions and vandalism. If you want coverage from additional perils not listed in your policy, such as earthquakes or water damage, you’ll need to purchase them separately.
Other categories of coverage include personal liability and excess living expenses. Liability protection provides financial assistance if someone else is injured on your property and you have to take legal action against you. This can help you pay for their medical expenses or lost wages due to their injury. If your home becomes unlivable due to repairs or a named peril, your additional living expense coverage can help pay for food and shelter in a safe place until your home is habitable again.
It is a good idea to install smart home devices throughout your apartment to provide additional protection and alerts against dangers such as theft, fire and gas leaks. Not only will this save you from repair costs throughout the life of your home, many policies (like those provided) also offer discounts for installing these devices and keeping them up to date.
Homeowners Insurance Types For Condos, Standalone Homes, And Apartments
HO-6 insurance does not cover any facilities or property that you do not actually own. While traditional homeowners own their entire home and surrounding land, condo owners only own the interior structure and contents. This means that any damage or needed repairs to the exterior structure of your building (and common areas like hallways and pools) will not be covered by your personal insurance policy, but by your building owner.
There are also specific risks that your home insurance policy typically doesn’t cover. This includes floods, earthquakes, erosion, insects and nuclear damage. To make sure your home is adequately covered for anything that happens to you (and you’re not paying for coverage you already have), it’s important to consider whether you need high-risk event coverage and double-check with your association of apartments to see what they will pay.
If you don’t plan to live in your apartment full-time, if you leave it empty or rent it to others while you’re away, you’ll need to update your insurance to accommodate your new living situation. Vacant home insurance can help cover your vacant home, but policies like DP-3 and short-term insurance can provide additional protection as tenants are allowed in your property.
So how does homeowners insurance differ from condo insurance? The main difference between the two comes down to costs and the amount of coverage.