Zillow’s Guide to Condo and Co-op Insurance

Sharing is what it’s all about for owners of condos or co-ops. You share walls, roofs, walkways, hallways, boilers, elevators, stairways, as well as other common spaces with other owners. You also share common services such as lawn mowing, garbage collection, and snowplowing, which are probably covered under your association dues and fees. One thing that gets tricky is insurance.

Who Covers What?
A condo or co-op association has a “master policy” for the condo or co-op complex that is paid for through your association dues or fees that are collected monthly or annually. While the master policy covers the common areas that you jointly own with other condo owners, it typically does not cover you, the inside of your condo, or any belongings you have in the condo or co-op. There are three types of master policies:

  • Bare walls – This covers the structure, fixtures, and furnishings of shared or common areas within the condominium complex.
  • Single entity – This covers everything within the bare walls policy, plus certain fixtures inside condo units (e.g., carpeting, cabinets, appliances).
  • All inclusive – This is the most comprehensive as it covers everything in the condo except for personal property brought into the units by the owner (e.g., clothes, bicycles, artwork).

Questions to Ask Your Condo Association
In order to figure out how much insurance coverage you need for your condo or co-op, you need to find out exactly what your association’s master policy covers. Here are some questions to ask:

  1. Does the association offer “bare walls” coverage, “single entity” coverage, or “all-inclusive” coverage?
  2. Who insures things like garages, sidewalks, swimming pools, and other common areas?
  3. Are you in an earthquake or flood zone?
  4. What am I responsible for insuring? (e.g., If there is a leak in the roof and there is water damage inside my condo unit, whose coverage is used to fix the interior walls?)
  5. How much is the association deductible?
  6. Do I have replacement cost or actual cash value coverage for my possessions?
  7. What Kind of Insurance Do You Need?
  8. For owners of condos and co-ops, an insurance policy called “HO-6” is what is typically used and it provides personal property and liability protection. This policy covers your personal belongings (e.g., clothes, bicycles, kitchen equipment), but typically does not cover things like appliances that may have been updated. For liability, this means if someone hurts themselves while inside your unit, you may have coverage.

How Much Insurance Do You Need?
The quick answer is it depends on how much you have. In case of fire or theft, you need to estimate the cost to replace your belongings and get insurance to cover that amount. Take an inventory of your possessions. It’s a good idea to take photographs of the high-ticket items and itemize the serial numbers or any other identifying documentation to help prove worth.Generally, $300,000 to $500,000 worth of liability coverage is acceptable, depending on your situation. Liability coverage protects you in case someone injures themselves in your home.

Usually, HO-6 policy premiums are several hundred dollars per year for that kind of coverage, but if you have belongings (e.g., collector’s item, antiques, jewelry) that need special protection, you can purchase extra insurance.

Tips to Reduce Insurance Costs
Go to an insurance agent that specializes in policies for condos or co-ops. An agent’s expertise will help assess your coverage needs based on what you own and your association’s master policy. Ask what you can do to help reduce rates (e.g., installation of a security, smoke, or fire alarm). If you use the same company that underwrites your building’s insurance policy, ask if it offers coverage and a reduction in premiums.