Before you buy a condo insurance policy, acquaint yourself with the basics. This page provides essential background info to help you get started.
What is condo insurance?
If you're the proud owner of a condo, condo insurance (also known as an HO-6 policy, "walls-in" insurance, or "studs-in" insurance) protects your personal property and all structures that you own against damage by theft, vandalism, and certain natural disasters. Condo insurance also protects you and your family against personal liability, bodily injury, and property damage claims, as well as loss of use, which covers your living expenses if you have to temporarily move while your condo is repaired.
Is condo insurance required?
Condo insurance isn't federally required, but it may be required by your mortgage lender. In order to qualify for a home loan, most lenders now require you to have condo insurance (HO-6 insurance) in addition to your homeowners association's (HOA) master policy.
In 2009, mortgage giants Fannie Mae and Freddie Mac began mandating condo insurance on all condo loans, and since then the lending industry has followed suit. In general, most lenders will require coverage to be about 20 percent of the appraised value of your new home.
Doesn't my HOA's insurance already cover my condo?
Contrary to popular belief, your HOA's insurance does not cover the contents or interior structures (walls, flooring, countertops, etc.) of your condo. Generally, HOA master policies provide variations on 2 types of coverages:
- Bare walls in — This type of coverage only covers the exterior structures (roof, exterior walls, elevator, pool, etc.) of the condo complex. Everything inside the condo (personal belongings, appliances, flooring, etc.) is your responsibility, which means you'll pay out of pocket to replace or repair damaged or stolen items.
- All in — This coverage protects the basic building as well as the items within your unit, except for your personal property.
Check your HOA's master policy (which should be given to you at the time of purchase) to see exactly what is and isn't covered. And even if your master policy provides all-in protection, it's still wise to consider condo insurance for the personal property protection and liability coverage it provides.
What's the difference between my condo insurance policy and the condo association master policy?
The main difference lies in the level of coverage. Your condo insurance policy protects you and all the things found inside your home. It can also protect you from identity theft, personal liability, loss-of-use expenses, and medical payments. On the other hand, your condo association's master policy might only provide coverage for the shell (roof, outer walls) of your condo.
How much condo insurance do I need?
To figure out how much coverage is enough, ask yourself:
- What does my HOA's master policy cover?
- What parts of my condo am I financially responsible for?
- How much would it cost to repair the interior of my home?
- How much would it cost to replace all or some of my belongings?
- Has my unit been recently remodeled or am I planning on remodeling?
- Do I have liability protection? If so, how much?
All of these factors will determine how much insurance is adequate. Your lending institution might require your coverage to be about 20 percent of your condo's appraised value, but that might not be enough. Since condo insurance is very affordable, don't skimp on your policy just to save a few bucks. Instead, get enough protection to repair and/or replace whatever isn't covered by your master policy and provide for living expenses in case you have to move.
I own a condo as an investment property, which I rent to a tenant. Do I still need condo insurance?
This depends. As the landlord, you could require your tenant to buy renters insurance to protect your tenant from liability and other damages. However, this will not protect the interior structures of the condo itself. We recommend getting landlord insurance protection to fully protect your investment.
Costs and savings
How much does condo insurance cost?
Condo insurance through Esurance is surprisingly affordable. A condo insurance policy will protect the things you cherish for only a few hundred dollars a year. Get a condo insurance quote to see how much the right coverage costs.
How do I lower my condo insurance rate?
To save on condo insurance, you can:
- Lower your level of coverage — Generally, the lower your limits and the higher your deductibles, the less your premiums will be. But since condo insurance is generally affordable, we don't recommend stinting on coverage just to save some change. In general, a higher level of coverage will cost you only a few dollars more per month and might be worth the investment.
- Raise your credit score — Believe it or not, most insurance companies look at your credit score to determine risk and compute your premium. Statistics have shown that those with higher credit scores tend to file less insurance claims, which makes them less risky to insure. And in the insurance world, less risk equals lower rates.
- Make your home safer — Some condo insurance companies will give you a discount if you have safety features, like a burglar alarm or fire sprinklers, in your home.
Where can I find cheap condo insurance?
Cheap condo insurance may be tempting, but might not provide the protection you need or the reliability you demand. Condo insurance offered through Esurance is reliable and very affordable — costing only a few dollars per day — and will protect you, your family, your belongings, and your biggest investment from loss.
And though condo insurance is generally on the affordable side, you can still lower your condo insurance premiums with these tips.
What condo insurance discounts are available?
You could qualify for a condo insurance discount if you have a burglar alarm or other safety system.
And, speaking of discounts, did you know that you could qualify for a Homeowners discount on car insurance from Esurance? How nice is that?
What payment plans are available?
You can pay annually with all major credit and debit cards as well as with electronic fund transfers. And in some cases, you can make your payments through your mortgage company.