If you’re like most condo owners, you’ve probably asked yourself, “What does condo insurance cover?” Your condo is a significant investment that requires customized insurance coverage. From cyber coverage to full replacement cost for your belongings, you can tailor your condo insurance for your specific situation in life.
What is condo insurance
As a condominium owner, you don’t need to worry about protecting the building you live in. Your condo association’s master policy will cover that. What you do need to worry about is protecting the things you own. That’s where condo insurance comes in.
While condo insurance is not required by law, mortgage lenders usually require proof that you have a certain amount of condo insurance before issuing a loan.
Here are the main areas of coverage you’ll get with a condo policy, which is also known as an HO6 policy:
Personal Property Coverage
Cabinets and Fixtures
Liability and Medical Coverage
Emergency Living Expenses
Personal property coverage
Condo insurance pays to repair or replace your personal belongings if they get damaged or stolen. Examples of items covered by condo insurance include computers, bicycles, clothing and furniture.
Your items don’t have to be inside your condo to be covered by condo insurance. They can be away from your home too. Here are some examples:
| From a Hotel Room |
| If you’re on vacation and someone steals your laptop from your hotel room, your condo insurance can cover you. |
| From Your Car |
| If your camera gets stolen from your car in a parking lot, your condo policy would kick in—not your auto policy. |
| From a Storage Unit |
| If a personal item gets stolen or damaged from a storage unit, your condo policy can cover the loss. |
Cabinets and fixtures
Typically, your condo association’s master policy extends right up to the walls of your unit. From that point on, your condo insurance takes over. It protects what is within the walls plus anything attached to the walls, such as your cabinets, appliances and flooring.
For example, if a pipe bursts and damages the kitchen cabinets, your condo insurance will provide coverage up to the value of the cabinets.
Liability and medical coverage
In addition to protecting your belongings, condo insurance can also cover you if someone gets hurt and you’re responsible. For example, if a guest at your condo accidentally trips and falls, and then files a lawsuit against you, condo insurance can help pay for your defense and court costs, as well as their medical expenses if you’re responsible.
Furthermore, liability is not tied to the condo, so the incident could happen anywhere at all. Let’s say you’re biking through a park and accidentally injure someone. If you were sued and found liable, your condo insurance could pay up to the liability limit amount on the policy.
Emergency living expenses
If you’re temporarily forced out of your condo due to a fire or some other covered event, condo insurance can help with emergency living expenses. That means it would help pay for your hotel, your meals and other related expenses.
Additional protection
If you want to maximize your protection, you can always add other coverages onto your condo insurance policy.
Cyber and identity protection
Cyber and identity protection is a good example of a valuable add-on coverage. It will keep you and your family one step ahead of cyber criminals. Here are some things it may cover:
| ID Theft Monitoring |
| Your credit report is monitored for online fraud. You’ll get an alert if a change is detected. |
| Cyber-Attacks |
| Your coverage could pay to restore your computer to its previous level of functionality. |
| Cyber-Extortion |
| Your coverage could pay for a professional to advise you on how to respond to the threat. |
Flood coverage
Condo insurance does not cover damage caused by flooding. As a result, you may want to purchase a separate flood insurance policy if you live in an area prone to flooding. You should also consider a separate earthquake insurance policy depending on where you live.
Supplemental loss assessment
This optional coverage pays for damages to shared areas that exceed your condo association’s master policy limits. For example, if a fire causes $500,000 in damage to the building and your condo association’s insurance limit is $300,000, then the remaining $200,000 must be covered by the condo owners. If there are 20 units in the building, each condo owner will be responsible for $10,000. Supplemental Loss Assessment coverage would help pay that amount.
What is a covered event
Bear in mind, condo insurance will only cover your belongings if they’re damaged by a peril that is listed on your condo insurance policy. This would make it a covered event.
- Fire or lightning
- Windstorm or hail
- Smoke
- Vandalism
- Theft
- Weight of ice or snow
Some of these covered events can be complicated. For example, let’s say the ceiling of your condo caves in from too much ice and snow, and your television is damaged as a result. In this case, your condo association’s master policy will pay to repair the ceiling, while your individual condo insurance policy will help pay to replace the television.
Actual cash value vs. replacement Cost
Typically, you will have a choice between two types of personal property coverage on a condo insurance policy: actual cash value or replacement cost. The difference is important.
- Replacement cost value – Pays you to replace the damaged item with a new, similar item.
- Actual cash value – Pays you what the damaged item is worth at the time of the loss.
| Sample Item | Age of Item | Original Price | Actual Cash Value* | Replacement Cost** |
| Bicycle | 3 years | $400 | $292 | $437 |
| Laptop | 4 years | $800 | $525 | $900 |
| Sofa | 5 years | $1000 | $590 | $1159 |
| Television | 7 years | $550 | $263 | $676 |
* Based on 10% yearly depreciation
**Based on 3% yearly inflation
EXAMPLE
Per the chart above, let’s say the sofa you bought for $1,000 five years ago is damaged in a fire. If your condo insurance policy provides for actual cash value, you’ll receive what your sofa is currently worth—which might be $590 due to depreciation.
If you have replacement cost value, you’ll receive the value of a new sofa of the same size and quality. In this case, you may receive $1,159 due to inflation. Having replacement cost on your contents may cost a little more up front, but it is really important if you want to replace your damaged items with new, similar items.
What isn’t covered by condo insurance
As previously discussed, condo insurance does not cover you if your belongings are damaged by an earthquake or flood. That’s because flood insurance and earthquake insurance are both separate policies.
In addition, condo insurance doesn’t cover damage to the physical structure of the building. Let’s say a large tree limb falls on your building and damages the roof. In that case, the damage would be covered by your condo association’s master policy, not your individual condo policy.
