As you prepare to buy a new condo, one of the requirements you will have is to purchase a homeowners insurance policy before you close on it. However, you will need to purchase condo insurance instead of a traditional home insurance policy. Here are three ways that condo insurance differs from regular home insurance policies.
1. The Coverage
To understand the difference between condo insurance and home insurance, you should understand the main difference between these two types of homes. A single-family house is a home that stands on its own and requires a home insurance policy.
A condo is part of a multi-family building, and you only purchase the inside of the house. The outside of the house belongs to the community that owns and manages the neighborhood.
Because of these differences, the main distinction between these types of insurance is the coverage they offer. Home insurance provides coverage for the entire house, both the outside and inside, and everything you have in the house. Condo insurance covers only the inside of the house and the things you own. However, there are two main types of condo insurance.
2. The Master Policy
A community of multi-family homes typically has a homeowners association (HOA) managing the community. The HOA holds an insurance policy called a master policy, and this policy protects the structure of each home in the neighborhood.
Master policies come in two main types. The first type is a bare walls-in policy, and the second is an all-in policy. An all-in policy covers more than a bare walls-in policy, and you will need to find out what type of master policy your HOA currently carries.
With a bare walls-in policy, you must get insurance coverage for the fixtures, appliances and counter tops within your condo. With an all-in policy, the HOA's insurance probably covers these parts of your home.
3. The Costs
The other major difference between these types of coverage is the costs for each type. As you can imagine, home insurance costs more than condo insurance in most cases. When you insure an entire home, the insurance company assumes more risk than if you insure only the inside of a house - insurance companies base rates on risk.
While home insurance is different from condo insurance, they do have similarities, which include the following:
- Protection for the things you own
- Choose the amount of coverage you want
- Choose the deductible
- Choose actual cash value or replacement cost coverage
- Liability protection against lawsuits that arise from accidents in your house
These are some of the similarities of these two types of policies, and you can purchase either type from an agency that offers home insurance products.
One thing to understand is that neither type include flood insurance coverage. If you worry that a flood could destroy your home and your belongings, you can add flood coverage to either type of policy. This is something most homeowners should consider purchasing, simply because floods can devastate an entire household, community and town.
If you need insurance for the condo you are buying, contact the experts at State Fund Insurance. We will find the best policy and rates for you and make sure you have the protection you need. Call us at 800-241-1151 to learn more about the coverage options we offer.