Are you weighing the pros and cons of condo insurance vs homeowners insurance? Overall, they provide the same types of coverage. However, homeowners insurance is more comprehensive than its condo counterpart.
Further, condo insurance is usually cheaper than homeowners insurance. For condo insurance, the national average is around $40 a month. However, the average cost of home insurance can be around $100 a month more. They also differ when it comes to optional coverage.
This article will highlight condo vs homeowners insurance in greater detail. Read further to know more.
What Is Condo Insurance?
Condo insurance is a protective safeguard purchased by a condo owner. It covers all items within the unit that are damaged or stolen. The policy will usually cover such items as furniture, appliances, or clothing.
You can choose from different types of property coverage, such as:
- Replacement Cost Coverage: This method doesn’t consider depreciation when adjusters tally the damage. The insurance company will reimburse you at the sticker price instead of the depreciated price.
- Actual Cost Coverage: This coverage will take depreciation into account. If your item has depreciated over time, the insurance company will reimburse you based on an item’s current value.
The type of coverage received depends on your insurance carrier. Therefore, review your policy carefully to know what type of coverage you have.
However, condo insurance doesn’t cover acts of nature, such as floods or earthquakes. Condo owners must get separate policies for floods and earthquakes. These policies are advisable if you live in areas prone to earthquakes or intense weather.
You can also obtain personal liability coverage if someone gets injured on your property. For instance, the policy will cover medical expenses if a court rules against you.
Before you unlock your condo insurance benefits, you must pay a deductible. Your deductible also depends on the terms and conditions.
- Example: If you have a $200,000 policy and a 5% deductible, your deductible will be $10,000.
In some cases, your condo policy may not have a deductible.
In addition to your insurance policy, your condo association may have a separate policy. A condo association policy is called a master policy, and it usually covers the unit’s exterior. A master policy could also cover your walls, roof, or floors.
You can take out a personal policy with a master policy in place. However, you should know what the master policy will cover before you obtain a policy of your own.
If you fail to review the master policy, you could obtain unnecessary coverage and pay more in the process. Further, let your insurance carrier know that you have a master policy. A master policy can affect your rates and coverage.
What Is Homeowners Insurance?
Homeowners insurance provides the same protection as condo insurance. It will protect you against theft, fire, and other unforeseen disasters.
The main difference is that homeowners insurance covers single-family homes instead of condos. Like condo insurance, a homeowners policy won’t cover earthquakes or floods.
The homeowner policy will cover the structure itself and all belongings contained within. It also comes with the same personal liability protections as condo insurance.
Additionally, homeowner policies come with the same types of coverage: actual value and replacement cost. Also, homeowner policy requite deductibles upfront. Overall, the deductible average is between $500 and $2,000. You can also pay a higher deductible to save money on premiums.
In most cases, a mortgage lender requires the borrower to obtain an insurance policy. A policy assures lenders that the house is protected in the event of a disaster.
The lending institution doesn’t issue the mortgage. Instead, you would buy a separate policy from an insurance carrier.
Conversely, a condo association usually doesn’t require condo owners to have an insurance policy.
Points of Confusion
Many homeowners confuse homeowners insurance with other forms of coverage. First, a home insurance policy is different from a home warranty. Warranties only cover items that have broken down due to wear and tear or improper maintenance.
The warranties usually expire after a year. With a house insurance policy, you’ll maintain coverage as long as you pay the premiums.
Homeowners insurance is also different from mortgage insurance. Mortgage insurance provides coverage for the lender in case you default on the mortgage balance. In other words, a mortgage protects the lender, whereas home insurance protects the borrower.
The main distinction between condo and homeowners insurance is the extent of the coverage. A homeowner policy provides more coverage for the property. Whereas single-family policies cover the property’s interior and exterior, condo insurance usually covers the interior alone.
In addition, both policies provide different types of coverage:
- Dwelling Coverage: This provision pertains to single-family homes. It allows homeowners to pay for structural damage to the home. It will also cover attached structures, such as a garage.
- Loss Assessment Cost: This feature belongs to condo insurance policies. It will cover anything not covered in the master policy. If the damage exceeds the association’s policy limit, the assessment option will cover the remaining costs. Loss-assessment coverage will prevent you from paying out of pocket for the remaining repairs.
Condo Insurance vs Homeowners Insurance: What’s the Verdict?
When it comes to the issue of condo insurance vs homeowners insurance, homeowners insurance is generally more important. As a homeowner, you’ll contend with more liabilities.
For condo owners, they generally don’t have to worry about exterior damage. The condo association will usually cover the exterior, including structural aspects of the condo such as the walls or floors.
On the other hand, homeowners have no umbrella coverage that protects them from exterior damage.
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