What’s the difference between a homeowner’s policy and condo insurance?

Getting insurance is kind of like choosing the coffee you want from among the plethora of options at Starbucks – except it’s ok to order something different from Starbucks. With insurance, you have to be careful, especially when it involves your home.

We live in uncertain times. There’s risk from severe weather, nonseasonal weather events, and risk from man-made disasters like fire and accidents. What knocks folks completely off their stride is the unexpected nature of disaster when it strikes.

Now, I don’t want that to happen with anyone, but the point is we must be prepared. And among the most important ways to be prepared is to insure your homes to safeguard your future from unforeseen calamities.

But the challenge is, how do you choose the right insurance coverage?

How do you decide between an HO-3 or HO-5 homeowner’s insurance policy? Which of these will cover you if a blizzard severely damages your home? What about the valuables inside your home, will the insurance cover that too?

To get an answer to all these questions, you must know the difference between condo insurance and a homeowner’s insurance.

The difference between a homeowner’s insurance and condo insurance[i]

Most insurance companies use the term ‘home insurance’ for all types of houses.

However, there’s a difference between a homeowner’s insurance and condo insurance. Let me walk you through the differences.

  1. Coverage

A standard homeowner’s policy covers the entire home as a single unit. It essentially means that the policy will cover the whole structure of your house including the yard, your personal property, and other structures such as the storage space or a garbage shed. You can even add adjacent areas such as landscapes and gardens in the policy.

In the case of condo insurance, you will only be responsible for a portion of your building because a condo association owns it. You share common areas with other residents, which include parking lots, garage, walkways, and other amenities provided by the condo association. So, the condo association takes on the responsibility of insuring areas that are common to all residents. You will have to take a separate cover for your personal property, unit upgrades such as the upgrades you did to the construction, and liabilities such as internal damages in the condo. Your condo insurance covers only your unit.

  1. Components of policy

Typically, condo insurance spans two components – your personal insurance where the interiors of your unit are covered and a commercial condo policy that covers the common areas such as the pool and lobby. The homeowner’s policy, on the other hand, is a single component as it covers the entire structure of the house.

  1. Pricing

Considering that the homeowner’s policy includes both the internal and the external areas of your home, the cost of the policy could be higher than that of a condo. For example, in the aftermath of a weather event, you might need cover to clear the debris from around your home. In the case of a condominium, this could be covered by the insurance policy the condominium management would have taken out since this would pertain to a common area. You are essentially insuring only for your part of the property.

  1. Raising a claim

Considering that you are the single owner of the house, it is easier to raise a claim for homeowner’s policy as compared to condo insurance, where you need to determine if the claim involves you or the condo association. Know the responsibilities that you share with the condo association and the responsibility you own so you can make an informed decision at the time of raising the claim.

What’s next?

Now that you are aware of the difference between condo insurance and a homeowner’s policy, ensure that you are appropriately protected. If you are a condo owner, make sure to seek cover only for the areas that fall under your purview. That will control the premium you will have to pay. Of course, you might face some challenges in determining where the owner’s responsibility ends and where the condo association’s responsibility begins. It’s not uncommon for such disputes to even go into litigation. Hence, ensure that all the liabilities are clearly mentioned in writing to avoid hassles later.

As an insurance agency, it’s our responsibility to help our customers decide the type of policy they should opt for. I know your home is special to you. That’s why we offer customized policies for your home. As far as possible, we also aim to simplify the process of raising claims. We know that folks turn to insurance when they’re at the lowest ebb in their lives. At that stage, we want to help as much as possible so you can rebuild your life and home again. And the first step of protecting yourself is taking a long hard look at the risks and the protection those risks demand.

[i] https://insureye.com/condo-owner-insurance-vs-house-insurance-7-differences/