Home or Condo – Understanding Your Insurance Options

There’s always a steady trend of people looking to purchase home insurance. This can be attributed to several factors. On the one hand, for example, the weather is becoming less kind with numerous natural disasters affecting cities across the United States. On the other hand, inflation is so high that repairing a damaged home is a significant financial burden because of the rising labor and material costs associated with repair work.

In fact, according to one report, the homeowners’ insurance industry in the United States grew by 6.3% in 2022. From 2017 to 2022, the average year-on-year growth rate was around 4.3%. However, there are many cases where people mix up what is covered in which policy and end up losing their insurance valuation or remain underinsured the entire time.

In this article, we will explain how and why home and condo insurance differ.

Insurance Covers for Homeowners and Condo Owners: Key Differences and Similarities

A homeowner’s insurance policy covers people who own a home and are responsible for both the interior and exterior of it, along with the land. Condo insurance, on the other hand, is for people who own a condo unit. These individuals do not own the building but rather own only one unit and are responsible for its upkeep.

Although there are many fundamental differences between home and condo insurance, there are some key similarities that every homeowner benefits from when they have the proper insurance coverage. These are:

Personal Property Coverage

Personal property coverage is required for both homeowners and condo owners. Such insurance policies are ideal for protecting property owners from hazards such as fire, theft, and other mishaps. Ideally, such insurance would cover assistance in repairing or replacing damaged items. 

The policy covers internal property such as furniture, electronic appliances, clothing, and so on. Further, personal property coverage extends to any area attached to the main building, such as attached rooms, storage units, etc.

Liability Insurance Coverage

Property owners, whether homeowners or condo owners, may incur financial losses if someone is injured or an accident occurs on their property. For example, if a visitor is injured as a result of a slick floor, the owner is responsible for paying for the injured individual. 

Liability insurance is ideal for covering any medical expenses, legal fees (in the event of a lawsuit), or settlement amount if the case takes a bad turn due to extreme damage. It is ideal and widely used by both homeowners and condo owners.

Additional Living Expense Coverage

This coverage is available when the property is unoccupied due to disaster or unsafe circumstances following an accident. Such coverage can reimburse owners for their temporary living expenses, food, and other necessities required for their stay until their home is refurbished or repaired.

Many insurance policies are irrelevant to condo owners but are critical for homeowners for a variety of reasons and vice-versa. Let us examine each of these differences:

Dwelling Coverage

Dwelling coverages are typically purchased to protect the building’s or property’s structure. In the case of homeowners, dwelling structure coverage is taken, which includes all surrounding or adjoining areas such as garages, garden sheds, and so on. Such coverage is not required for condo owners because the basic requirement for the condo is the protection of the internal structure only, like internal fixtures or appliances. Both homeowners and condo owners can purchase this as an add-on, depending on how much coverage they require, in addition to their general property insurance.

The cost of this coverage is determined by the covered area and the estimated cost to replace or repair the parts/area. In general, the state/city of the property plays a key role in determining the cost of the coverage required. This is because labor and material costs differ from city to city. Furthermore, disaster-prone states generally require more coverage. The premiums for homeowners are higher than those for condo owners because they have a larger property to cover.

Land Insurance

Land insurance is typically purchased by homeowners and is not required for condo owners. This insurance policy has a broader scope and covers many gray areas that property insurance does not, as it only aids in the repair and replacement of the structure. However, more coverage is required for land insurance to protect the base land. This includes liability coverage, disaster coverage, income loss coverage, property damage coverage, and so on. These policies are ideal for lands that generate revenue and whose income is interrupted by a disaster such as a fire or natural disaster.

Although it is always recommended that homeowners purchase extra add-ons such as earthquake or flood insurance, some land insurance policies may cover damage caused by these disasters. Furthermore, land insurance policies can help to cover damaged/stolen fencing, boards, or signage.

Condo Association Master Policy

This master policy is only required for the owners of the whole condominium. It protects them from financial loss that can happen in common areas that are shared by all individual condo owners. These areas include lifts, a gym, lobbies, a terrace, parking, and so on. This insurance policy will cover the damage associated with any personal injury or property in these common areas. It also covers any common foundational structural damage, such as walls, roofs, and so on. 

However, the condo association, not the individual condo owner, is responsible for obtaining this insurance coverage. The fees for this insurance policy is added to the fees paid by individual condo owners, which can also be referred to as maintenance fees or general insurance fees for external protection. The price of such policies is set by the association based on the size and needs of each condo.

Wrapping Up

Altogether, there are several similarities and differences between homeowners’ and condo insurance coverage. But because these factors are often overlooked, many homes in America remain uninsured or underinsured.

So, it is best to seek the advice of experts if you want to fully comprehend the best way to protect your property. Contact us today for a portfolio analysis and a customized quote.