Homeowners insurance for condo or co-op: What is an HO-6 condo insurance policy?

Our experts answer readers' insurance questions and write unbiased product reviews (here's how we assess insurance products). In some cases, we receive a commission from our partners; however, our opinions are our own.

• Average HO6 condo premiums could be as low as $43 monthly, lower in some states.
• Condo policies cover upgrades, personal property, liability, and more.
• A condo insurance policy can cover extra costs if you're unable to live in your condo.

Homeowners insurance's primary function is often thought of as dwelling coverage (the cost to rebuild your home). However, it can also cover your personal belongings, personal liability, other structures like garden sheds or detached carports, extra costs if you're temporarily displaced, and much more.  

There are several types of homeowners insurance based on the dwelling type. Condo insurance is known as an HO-6 homeowners insurance policy. The major difference between standard homeowners insurance and condo insurance is the dwelling coverage.

Homeowners insurance is not required by state law. However, if you have a mortgage, your lender will require homeowners insurance to protect the investment. Additionally, a condo association's by-laws may require owners to have condo insurance.

A condo master policy covers the building and common areas

For condominiums, the condo association owns and manages the building and common areas. So if something happens to the building, your HOA would pay to rebuild it. Some policies have "all-in" coverage, typically with the caveat of "as originally built." Particularly with older units, it's natural to make updates and upgrades to your appliances, flooring, etc. Your condo policy should have enough "dwelling" coverage to cover these updates.

Owners contribute to the master policy insurance coverage through assessments paid to the condo association. An "all-in" master policy covers "protects external structures, common areas, liability, fixture repairs, replacements and even upgrades made by individual owners," according to Hippo. A "bare walls" master policy covers "only external structures and common areas." Single entity coverage goes beyond bare walls "by shielding condo owners from liability to replace or repair original fixtures inside each unit," per Hippo Homeowners Insurance - Product Name Only.

Data from Hippo Insurance

Condo insurance covers what the master policy and assessments do not

Although the condo association's master policy covers the building and common areas, your assessment payments do not cover the contents of your unit, injuries that occur in your unit, or damage to your unit. Condo insurance is referred to as "walls-in" coverage because it covers everything inside your walls, whether that's your property, your liability, or damage inside your unit. As you might imagine, the dwelling costs are much lower, driving down annual premiums.

Condo and co-op owners can also enjoy a specific type of coverage called loss assessment, which kicks in to cover any additional costs that may be requested should the condo association's own coverage fall short. Any time a homeowners association's reserves fall short of what's needed for maintenance or repair costs, it will issue a "special assessment" payable at once or on a monthly basis, depending on the HOA. Loss assessment coverage helps condo owners cover those payments.

*Consult condo association master policy and by-laws 

**Available as add-on coverage if not part of policy

***Required if you are in a flood zone, but most homeowners experience some flood

Condo vs townhome vs standard homeowners insurance

Suppose you live in a condo or co-op. In that case, the building and common areas are covered by the condo or co-op association's master policy, which condo owners contribute via condo assessments.

Special form (HO-3) is the most common type of homeowners insurance because it covers the house (dwelling), personal property, and personal liability coverage. Condo insurance is different from your standard homeowners insurance because the condo association's master policy covers dwelling coverage. In this respect, condo insurance resembles renters insurance because neither condo owners nor renters own the dwelling.

Townhomes can be HO-3 (standard homeowners) or HO-6 (condo insurance) depending on whether or not there is a homeowners association.

How much does condo insurance cost?

According to the Condominium/Cooperative Unit Owner's Insurance Report by the National Association of Insurance Commissioners (NAIC), the average annual condo insurance premium in the United States in 2017 was $488. 

Homes located in disaster-prone areas — flood zones, hurricanes, tornadoes, wildfires, mudslides, hail, and earthquakes — will have increased premiums because these types of events are not included in basic coverage and will need to be add-on riders. 

Note that the cheapest price is probably not the way to go if that means a company isn't responsive when you file a claim. Focus on customer service, complaints, and the reputation of the insurance provider.  

Data from the NAIC

How to find condo insurance

If you currently have condo insurance, review your policy coverage yearly, especially if your condo association has changed by-laws regarding insurance coverage. If your condo insurance company hasn't provided the level of service you expected, maybe it is time for you to select a new provider.

Remember that a cheap price doesn't mean good customer service. The average cost for condo insurance will vary based on the state where you live and whether you are urban or rural. Focus on customer satisfaction rankings, like those from JD Power, and comparison shop. This is especially important for those living in disaster-prone areas, when good service can make all the difference.