Condo or Homeowners Insurance — Which One You Need

Three ways buyers get this wrong

1
Assuming a townhome means a condo policy
A great deal of townhome and rowhouse construction is fee-simple: you own the structure and the ground under it, with an association that maintains the common areas and insures nothing of yours. That needs a homeowners policy, in a row of eight identical units, with its own front door and shared walls. Buying a condo policy there leaves the building uninsured. The recorded declaration and the deed settle it; the architecture never does.
2
Assuming the association insures your kitchen
A bare-walls master policy stops at unfinished structure — studs, subfloor, and nothing else. Cabinets, flooring, fixtures, countertops and built-ins are yours. An all-in master policy reaches the original finishes but not your upgrades. Until you read the master policy declaration page, you do not know which of your own walls you are insuring, and the summary sheet the management company hands out is not that document.
3
Leaving loss assessment at the default limit
Governing documents commonly allow an association to charge its deductible to the unit where a loss began, and building deductibles routinely run into five figures. Loss assessment coverage on an HO-6 is what responds. The default limit written into most condo policies was set long before deductibles reached their current size, and raising it is one of the least expensive changes available.

What an HO-6 covers that a homeowners policy does not need to

A condo policy is built to start where the master policy stops. Coverage A on an HO-6 insures your interior finishes and improvements rather than a whole building, which is why the limit is a fraction of what a house would carry and why it has to be set against both the master policy and your own renovations. It adds loss assessment, which has no equivalent on a homeowners policy, and it leaves the roof, the siding and the structure to the association.

What stays the same in both

Personal property, personal liability, loss of use and medical payments to others work the same way on either policy. So do the exclusions: flood and earthquake are excluded on both and bought separately. So do the sub-limits on jewelry, bicycles and electronics. If you are moving from renting to owning, personal property and liability are the parts of the policy you already understand.

How to settle it in ten minutes

Read the recorded declaration or ask the title company one question: do I own the structure, or an interior airspace? If you own the structure, it is a homeowners policy. If an association owns the building and you own the interior, it is a condo policy. Then ask the association for the master policy declaration page and find out whether it is bare walls or all-in, and what the deductible is. Those two documents answer everything else.

Either way, home and auto still go together

Condo, townhome or house, most carriers discount the property policy and the auto policy when both are written with them. A purchase is the moment the auto address changes anyway, which makes it the natural time to price the pair rather than two separate transactions six months apart.

Two documents decide which policy you need

Ask for both before you buy either policy.

The recorded declaration or the deed — do you own the structure, or the interior?
The association master policy declaration page, not the summary
Whether the master policy is bare walls or all-in
The master policy deductible, and whether it can be charged to a unit
Whether the association carries earthquake, and flood where that applies
Any special assessment voted in or pending, and the reserve study date
What you have installed yourself since the unit was built

You can bundle home and auto on the same call

Most carriers write home and auto together and apply a multi-policy discount to both when they do. Renters and auto bundle the same way, so you do not have to own the place to get the credit. Ask what the discount comes to on each policy before you decide, and ask to line the two renewal dates up so you review everything once a year instead of twice.

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Frequently asked questions

Do I need condo insurance or homeowners insurance for a townhome?

It depends on ownership, not architecture. If you own the structure and the land it sits on, that is a homeowners policy. If an association owns the building and you own the interior, that is a condo policy — an HO-6.

What is an HO-6 policy?

The standard condominium unit-owner form. It covers your interior finishes and improvements, your belongings, your liability, loss of use, and loss assessment from the association, and it leaves the structure to the master policy.

What does bare walls mean?

A master policy that insures the unfinished structure and nothing inside your unit — no cabinets, flooring, fixtures or built-ins. Those become your responsibility, which is why the dwelling limit on your own policy has to be set against the master policy wording.

What is loss assessment coverage?

Coverage on your own policy for an assessment the association charges you after a covered loss, including its deductible where the documents allow that. The coverage is standard; the default limit is usually too small.

Does my lender care which one I buy?

Yes, and so does the association. A lender financing a condo will have its own requirements for the master policy as well as for yours, which is part of why the master declaration page gets requested during closing.

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Insurance for homebuyers First-time home buyer insurance Insurance binder for closing When to buy home insurance before closing

Condo or homeowners insurance?

Three ways buyers get this wrong

Assuming a townhome means a condo policy

Assuming the association insures your kitchen

Leaving loss assessment at the default limit