What is the difference between condo insurance vs homeowners insurance? This is a good question as condo and home insurance share some similarities and also some very notable differences.
Condo Insurance vs Homeowners Insurance
Purchasing a condo is very similar to purchasing a house; both afford you certain freedoms, but you also have to be responsible for what happens to them. That's where condo insurance vs homeowners insurance comes into play.
Many people assume that if they own a condominium, they have to have a homeowner's insurance policy; however, that isn't the case, and that's exactly why insurance that is specifically designed for condo owners exists.
So, what's the difference between these two similar, yet different types of insurance? Let's take a look.
Condominium vs House: What Needs To Be Covered?
One of the biggest differences between owning a home and a condo is how much of the property has to be insured. When you buy a house, you own it entirely; this means that you are completely responsible for the interior and the exterior, as well as the land that it is situated on.
When you buy a condo, however, you are typically only responsible for the interior of the dwelling. Ownership of the structure the condo is within, the land it sits on, and any common areas are all usually shared between you and other people who dwell within community. These elements are typically insured by a homeowners association (HOA). Since condo owners have different responsibilities than homeowners, it really doesn't make sense to set up condo insurance the same way you would homeowners insurance.
Coverage For The Dwelling
Both condo insurance and homeowners insurance provide coverage for the dwelling; however, there is a significant difference between the amount of dwelling coverage you will need and this is where you can the some of the differences between condo insurance vs homeowners insurance.
With a condo, you will probably only need enough protection for your dwelling to rebuild the inside of the unit; this includes interior walls, ceilings, flooring, and any other part of the dwelling that is on the interior of your condo.
Anything on the outside of the dwelling, such as the exterior walls, communal stairways, elevators, hallways, etc., is covered under HOA insurance. There are cases where an HOA will also cover some of the interior portions of your dwelling. If that's the case, the amount of condo insurance you would need will be reduced.
With a house, dwelling coverage should be so that the policy will cover the complete cost of the home, as well as any other structures that are located on the property, such as detached garages, fences, sheds, and so forth. Since the cost to rebuild a home is usually more than the cost to rebuild the interior of a condo, homeowners typically need quite a bit more dwelling coverage than condo owners do - so the cost of condo insurance vs homeowners insurance is higher for a home.
Coverage For Liability
Both condominium owners and homeowners could be held liable in the event that someone is injured within the dwelling or they damage the property that someone else owns. Personal liability coverage will help both types of owners cover the cost of and claims that are filed against them in these types of circumstances.
However, there is a difference regarding liability. Condo owners usually won't be held liable for any incidents that occur in common areas; a visitor slips and falls down the stairs in the front lobby or in the pool area, for example. Typically, HOA insurance covers these types of situations.
Homeowners, on the other hand, are responsible for any damage that occurs on their property. Since homeowners own not just their house, but also the property it sits on, they are liable for any accidents or injuries that occur outside of the home and within the confines of their property. For instance, if a guest falls off of a slide or trips on your walkway, you would be responsible. Your homeowners liability insurance will help to cover the cost of these types of claims.
Coverage For Personal Property
For condo owners, covering the cost of their personal property is their primary responsibility. That's because HOA insurance usually won't cover these types of losses.
Homeowners are responsible for covering their dwelling, the property their home sits on, as well as the contents of their home. In either case, you will want enough coverage to help you pay for the replacement of any damaged or stolen personal property that is located inside your abode.
Condo Insurance vs Homeowners Insurance - The Bottom Line
We hope this article on condo insurance vs homeowners insurance has been informative. So if you are asked what the difference between homeowner and condo insurance is - you can answer.