If you own a house or a condominium or even if you rent, it’s vital you have enough insurance to protect your belongings and your property in case of theft or disaster. If you’re a homeowner with a mortgage, you already know home insurance is required. But if you’re in the market to buy a house or condo, there are some things you should know about picking the right insurance policy for your needs.
House, Condominium, or Apartment: What’s the Difference?
As you might expect, homes, condos, and apartments are very different properties, and their insurance needs will also differ. Before we get started, let’s dig into the details of what exactly sets them apart:
- A house refers to a standalone property that is owned by an individual, including the land itself and any dwellings or structures built on it.
- A condominium, on the other hand, is a type of housing where individuals don’t generally own the land but instead lease individual dwelling units within a larger complex (often appointed with amenities).
- Finally, an apartment is a situation where the inhabitant owns neither the land nor any structure built there but pays monthly in order to live there.
These differences are basic, but important to remember when talking about insurance.
What Does Your Insurance Cover?
So what’s the difference between homeowners, condo, and renters insurance? Let’s take a look at the finer points.
In general, the purpose of homeowners insurance is to protect homeowners from financial loss in case of events like theft, fire, legal liability, or other common perils. When you take out a home insurance policy, your personal belongings, property, and any structures built on the property are covered.
Condominium insurance also known as HO6 insurance works differently than homeowners insurance. The residents of a condominium don’t own the property, and they also share common areas and amenities with other residents (such as pools, gyms, and so on). Condo insurance focuses on protecting personal belongings and the unit itself — such as appliances and fixtures. Condo insurance also provides liability coverage in case someone is injured while in the unit.
Finally, we come to renters insurance. Because a renter owns neither the dwelling nor the property it’s built on, renters insurance protects only the personal property inside the unit. Fire, theft, and other common perils are all covered, as is liability if someone is injured on the property and the tenant is deemed responsible.
Homeowners Associations and Insurance
In most condominium complexes, a homeowners association (HOA) may have its own insurance coverage. Many condos have what’s called “master insurance,” which covers the overall condo structure and common areas. But this master insurance typically doesn’t cover the individual units or the personal belongings of the owners. If you’re a resident of a condominium, it’s a smart idea to talk to your HOA to see what’s covered, and then consult your insurance carrier about any additional coverage you may need.
Why Home or Condo Insurance is Important
While you can technically live without renters or condo insurance (and, in some cases, home insurance), it’s almost never a good idea. Insuring your property not only provides peace of mind about financially covering your possessions in case of fire, burglary, or natural disaster, but it also protects against the potentially devastating consequences of someone getting injured on your property. Without insurance, you could end up stuck with massive medical bills and damages.
Coverage and Costs
Now that we’ve established the benefits (and necessity) of insurance, let’s talk about what kind of coverage you should have in each case.
For renters, things are relatively simple — you can purchase a policy that covers your personal belongings, perhaps even bundling it with your auto insurance for a discount. The most work you might end up doing is shopping around the internet to compare home insurace quotes.
In the case of homeowners insurance, you may need to do a bit more. For example, Kristine Lee at The Zebra points out that a “vanilla” homeowners insurance policy is not likely to cover your every need.
For example, if you live in an area that’s particularly prone to specific natural disasters — most commonly earthquakes, floods, wildfires, or other extreme weather events — your standard homeowners’ policy probably won’t cover it. It’s a good idea to talk to your insurance carrier about taking out additional insurance for these particular perils.
While condominium residents don’t have to worry about protecting the overall complex from disaster, it’s still advisable to see if extra insurance for things like floods and earthquakes is necessary.
When considering homeowners, condo, or renters insurance, don’t be afraid to shop around and compare quotes. Insurance premiums can vary wildly between insurance companies, and you don’t want to end up paying more money than you need for the same coverage.