Condo and co-op owners need homeowners insurance, but it's not the same type you'd get for a house

Article Courtesy of The Business Insider

By Ronda Lee

Published November 13, 2020

  • Condo HO-6 insurance is a type of homeowners insurance for condo and co-op owners.

  • The major difference between condo and standard homeowners insurance is the dwelling coverage.

  • Although not required by law, mortgage lenders and condo associations may require condo insurance.

  • The average annual cost of condo insurance in the US is $488.

There are several types of homeowners insurance based on the dwelling type: condo, home, mobile home, or new construction. Condo insurance is also known as an HO-6 homeowners insurance policy. The major difference between standard homeowners insurance and condo insurance is the dwelling coverage: how it protects the structure itself.

Unlike car insurance, homeowners or condo insurance is not required by state law. However, if you have a mortgage, your lender will require homeowners insurance to protect the investment. Additionally, a condo association's by-laws may require condo owners to have condo insurance.

What is homeowners insurance?

Homeowners insurance protects the dwelling, your belongings, and offers liability coverage for injuries that happen on your property. If the mailman slips and falls on the sidewalk, the dog bites a guest, a tree falls on your roof, or the neighbor's kid injures himself doing a cannonball in the swimming pool, homeowners insurance can protect you.


If you live in a condo or co-op, the building and common areas are covered by the condo or co-op association's master policy, to which condo owners contribute via condo assessments.

Condo insurance vs standard homeowners insurance

Special form (HO-3) is the most common type of homeowners insurance because it covers the house, your belongings, and liability coverage, according to Hippo. Condo insurance is different from your standard homeowners insurance because of the dwelling coverage.

In this respect, condo insurance resembles renters insurance because neither condo owners nor renters own the dwelling.

Condo association's master policy covers the building and common areas

For condominiums, the building and common areas are owned and managed through the condo association. The condo association's by-laws will outline insurance coverage for the dwelling, known as the master policy. Owners contribute to the master policy insurance coverage through assessments paid to the condo association. The exterior walls and hallways are considered common areas and would fall under your condo association's master policy.

In addition to covering the dwelling, the condo association's master policy covers liability for injury that occurs in common areas. You need to check your association's by-laws to determine whether the master policy has "all-in" coverage or "bare walls" coverage.

An "all-in" master policy covers "protects external structures, common areas, liability, fixture repairs, replacements and even upgrades made by individual owners," according to Hippo, whereas a "bare walls" master policy covers "only external structures and common areas."

Condo insurance covers what the master policy and assessments do not

Although the condo association's master policy covers the building and common areas, your assessment payments do not cover the contents of your unit, injuries that occur in your unit, or damage to your unit. Condo insurance is referred to as "walls-in" coverage because it covers everything inside your walls, whether that's your property, your liability, or damage inside your unit.

Plus, condo and co-op owners get a specific type of coverage called loss of assessment, which kicks in to cover any additional costs that may be requested should the condo association's own coverage fall short. If the association's coverage isn't enough should there be an accident or event, the association will ask for additional payment from each member, and loss of assessment coverage helps condo owners cover those payments.


Cyber liability **
Special jewelry/high-end electronics **
Flood ***
Earthquake **
Water damage ****


*Consult condo association by-laws 

**Available as add-on coverage if not part of policy.

***Required if you are in a flood zone, but most homeowners experience some flood.

****Depends on the type of coverage you selected.

Peril vs open peril homeowners policies

There are several types of homeowners policies. However, they all fall within two categories: named peril policy or open peril policy. A "named peril policy" covers you for listed events, like a fire, storm, or theft, whereas an "open peril" policy covers just about anything that might happen, unless your policy specifically notes that it's not covered.  

Insurance company Lemonade provides the following example of an open peril: If an apartment flood ruined your computer, and your policy doesn't specifically say flooding isn't covered, your insurance company will have to approve your claim, by default.

Condo insurance falls under named peril. Here are a few more instances of events that might be considered named peril and open peril:

Named peril Open peril
  • Fire or lightning
  • Windstorm or hail
  • Explosion
  • Riots
  • Aircraft
  • Vehicles
  • Smoke
  • Vandalism
  • Theft
  • Falling objects
  • Weight of ice, snow, or sleet
  • Accidental discharge or overflow of water or steam
  • Sudden and accidental tearing, cracking, burning, or bulging
  • Freezing
  • Sudden and accidental damage due to short circuiting
  • Volcanic eruption
  • Freezing pipes and systems in vacant dwellings
  • Damage to foundations or pavements from ice and water weight
  • Theft from a dwelling under construction
  • Vandalism to vacant dwellings
  • Latent defects, corrosion, industrial smoke, pollution
  • Settling, wear, and tear
  • Pets, other animals, and pests
  • Weather conditions that aggravate other excluded causes of loss
  • Government and association actions
  • Defective construction, design, and maintenance

There are 8 types of homeowners insurance policies

There are eight types of homeowners policies based on the type of home you have. If you have a mortgage, your lender may have a preference for the type of coverage necessary to secure the home loan. Therefore, it is best to talk to your agent and lender to make sure you have proper coverage.

Additionally, some condominium associations will have rules in the by-laws about homeowners insurance coverage minimums.


Policy Type Dwelling Liability  Belongings  Peril Type
HO-1 Basic* Yes No No Peril
HO-2 Broad* Yes No Yes Peril
HO-3 Special Yes Yes Yes Open/Peril**
HO-4 Renters No Yes Yes Peril
HO-5 Comprehensive*** Yes Yes Yes Open
HO-6 Condo/Co-op Yes**** Yes Yes Peril
HO-7 Mobile homes Yes Yes Yes Open/Peril
HO-8 Older homes Yes Yes Yes Peril

*Most lenders don't consider this sufficient coverage.

**The structure is "open peril" while belongings are "peril."

***Typically for brand-new homes only.

****Check with your homeowners association (HOA) first.

According to the Condominium/Cooperative Unit Owner's Insurance Report by the National Association of Insurance Commissioners (NAIC), the average annual condo insurance premium in the United States in 2017 was $488. 

Homes located in weather zones or disaster-prone areas flood zones, hurricanes, tornadoes, wildfires, mudslides, hail, and earthquakes will have increased premiums because these types of events are not included in basic coverage and will need to be add-on riders. 

Note that the cheapest price is probably not the way to go if that means a company isn't responsive when you file a claim. Focus on customer service, complaints, and the reputation of the insurance provider.  


Insurance range Average HO-6 condo insurance annual premium
$13,999 and under $367
$14,000 to $19,999 $351
$20,000 to $25,999 $424
$26,000 to $31,999 $387
$32,000 to $37,999 $389
$38,000 to $43,999 $415
$44,000 to $49,999 $402
$50,000 to $74,999 $459
$75,000 to $99,999 $521
$100,000 and over $837


How to find condo insurance

If you currently have condo insurance, review your policy coverage yearly, especially if your condo association has changed by-laws regarding insurance coverage. If your condo insurance company hasn't provided the level of service you expected, maybe it is time for you to select a new provider.
Remember that a cheap price doesn't mean good customer service. The average cost for condo insurance will vary based on the state where you live and whether you are urban or rural. Focus on customer satisfaction rankings, like those from J.D. Power, and comparison shop. This is especially important for those living in disaster-prone areas, when good service can make all the difference.