Condo Insurance 101: How It Works And Why You Need It

​Condo life comes with shared walls, shared amenities—and shared responsibilities. That’s why condo owners carry two layers of protection: the association’s master policy for the building and common areas, and your individual condo (HO-6) policy for what’s inside your unit and for your personal liability. Understanding where each policy starts and stops prevents expensive gaps when something goes wrong.

What Exactly Is Condo (HO-6) Insurance?
A condo (HO-6) policy is personal insurance for unit owners. It typically covers:

• Your unit’s interior (the parts you’re responsible for—see Section 2): walls, floors, ceilings, built-ins, cabinetry, fixtures, and improvements/betterments.
• Your belongings: furniture, clothing, electronics, décor, appliances you own.
• Your liability: if someone is injured in your unit or you accidentally damage others’ property.
• Guest medical payments: small, no-fault medical coverage for visitors hurt in your unit.
• Loss of use / additional living expenses (ALE): hotel, meals, laundry, and other extra costs if a covered loss makes your unit uninhabitable.
• Loss assessment coverage: helps pay your share if the HOA assesses unit owners for a covered loss to common areas (often including part of the master policy deductible).

Goal: Make the master policy and your HO-6 work together so almost everything is covered somewhere—without paying twice.


The Master Policy vs. Your Policy: Who Covers What?
Condo associations buy a master policy for the building and common elements (roof, lobby, elevators, pool, exterior, etc.). The master policy type determines how far coverage extends inside each unit:

1. Bare Walls / Walls-Out

• Master covers: structure up to the unfinished interior wall surface.
• You cover: drywall inward—everything finished inside the unit (flooring, cabinets, fixtures, appliances, improvements).

2. Single-Entity

• Master covers: original fixtures and finishes as built by the developer.
• You cover: upgrades/improvements you added (better flooring, custom cabinets, remodeled baths), plus personal property and liability.

3. All-In / All-Inclusive

• Master covers: most fixtures and finishes inside the units including improvements/betterments (details vary).
• You still need: personal property, liability, loss of use, and often loss assessment limits. Many owners still keep some “unit improvements” coverage to be safe because definitions can be narrow.

Action: Get your HOA’s bylaws and a copy of the master policy certificate each renewal. Your agent needs these to size your HO-6 correctly.


What Your HO-6 Typically Covers (and Common Limits)
1. Unit Interior (Dwelling/Improvements)

• Covers built-ins, finishes, and upgrades you’re responsible for.
• How much? Estimate what it would cost to refinish the interior of your unit (flooring, cabinets, counters, bath/kitchen fixtures, interior doors, paint). For “bare walls” buildings this limit will be higher.

2. Personal Property (Contents)

• Furniture, clothing, electronics, rugs, small appliances, décor.
• Settlement: Usually actual cash value by default; ask for replacement cost so depreciation isn’t subtracted.
• Special limits: Jewelry, watches, fine art, collectibles, and certain electronics may have sublimits—schedule high-value items separately.

3. Personal Liability

• Lawsuits for bodily injury or property damage you’re legally responsible for (e.g., a guest falls; your leaking aquarium damages a neighbor’s unit).
• Typical limits: $300k–$500k; consider $1M if you entertain often or have higher assets. Add a personal umbrella for extra millions in protection.

4. Guest Medical Payments

• No-fault medical coverage for small injuries to visitors (commonly $1k–$5k).

5. Loss of Use (ALE)

• Pays for temporary housing and extra living costs while repairs are made after a covered loss.

6. Loss Assessment

• Helps pay your share when the HOA assesses owners for a covered loss to common areas or for the master policy deductible after a claim.
• Tip: Policies often include a small amount (e.g., $1,000) by default. Consider raising this to $25k–$100k+ depending on the building’s master deductible.

What’s Not Covered (Unless You Add It)

• Flood (rising water from outside): requires a separate flood policy (NFIP or private).
• Earthquake (in many states): separate policy/endorsement.
• Sewer or drain backup: add a water-backup endorsement.
• Wear and tear, maintenance, pests, mold (varies): generally excluded.
• Business activities in the unit: may need home-based business or endorsement.
• Short-term rentals (Airbnb/VRBO): many policies restrict or exclude—get the right endorsement or a landlord/short-term rental policy if permitted by your HOA.

How Much Coverage Do You Need? (Quick Sizing Steps)
1. Read your bylaws + master policy type (Bare Walls, Single-Entity, All-In).

2. Estimate interior rebuild cost you’re responsible for:

• Square footage × local interior finish cost per sq ft (ask your agent/contractor for a realistic range).
• Add upgrades: stone counters, hardwood, custom closets, luxury fixtures.

3. Inventory personal property (photos + rough values).

4. Check HOA’s master deductible (e.g., $25k–$250k+ coastal wind/hail). Set loss assessment limits high enough to handle a worst-case assessment.

5. Pick liability limit ($300k–$1M) + consider a $1–$5M umbrella.

6. Add endorsements (water backup, special personal property, scheduled jewelry/art, equipment breakdown where available).

7. Set deductibles you can afford (higher deductibles lower premium but increase your out-of-pocket at claim time).


Common Claim Scenarios: Who Pays?
Pipe bursts in your unit and damages the hallway:

• Your HO-6 may cover your unit’s interior and your liability for damage to common areas or neighboring units; the HOA’s master policy addresses common-area building damage, often followed by a deductible assessment to owners.

Wind/hail damages the roof and water leaks into multiple units:

• Master policy handles roof/common areas; your HO-6 covers your unit’s interior finishes and belongings. Expect a loss assessment if the HOA’s deductible applies.

A guest slips in your kitchen:

• Your personal liability and guest medical respond.

Garage break-in; your bike and tools are stolen:

• Personal property coverage (subject to deductible and limits).

Key Point: Coverage depends on the cause of loss, your bylaws, and both policies’ wording. Report claims promptly to both your HOA and your insurer.


Cost Drivers (and Legit Ways to Save)
What affects the premium:

• Building type, protection class (fire department proximity), and master policy deductible.
• Your unit’s square footage, finishes, location (coastal, hail, crime rates).
• Coverage limits, endorsements, and your deductibles.
• Prior claims history and credit-based insurance score (where permitted by law).

How to save without weakening protection:

• Bundle with auto (multi-policy discount).
• Install monitored alarms, water-leak sensors, and smart shut-off valves.
• Choose a higher deductible you can comfortably afford.
• Ask about newer building or gated/secured building discounts.
• Keep loss assessment reasonable but adequate (don’t skimp if the building’s master deductible is high).

Bottom Line
Condo insurance isn’t “nice to have”—it’s the missing half of your building’s protection. Start with your HOA’s rules and master policy, size your HO-6 for the interior and your belongings, raise loss assessment to realistic levels, and add targeted endorsements (water backup, scheduled valuables).

The result is a seamless two-policy safety net that protects your home, your stuff, and your savings when life gets messy.

At Clark & Bell Insurance Agency, we aim to simplify the insurance process while delivering exceptional service and affordable options tailored to your needs. For more information or a free quote, call us at (239) 334-4141 or CLICK HERE.

Disclaimer: The information provided in this blog is intended for general knowledge only. Consult a licensed insurance professional for personalized advice suited to your specific insurance requirements.