Co-op, Condo, and Homeowners Insurance: How are they Different?

Co-ops, condos, and houses are all homes, but you don’t insure them with the same insurance policies. This article explains the differences between homeowners, condo, and co-op insurance.

Co-op vs Condo vs Homeowners Insurance

Condos. Co-ops. Houses. They’re all homes, so you protect them with homeowners insurance, right?

Wrong.

Although home insurance, co-op insurance, and condo insurance are similar, they’re not the same.

That’s mainly because what you own in each of these living situations is slightly different.

For example, when you buy a house, you don’t just own the building. You also own its contents, the land it sits on, and any other structures that surround it.

That’s not the case when you buy a condo. And that’s true when you buy shares in a housing cooperative or co-op.

When you buy a condo, you don’t own the land, the exterior walls, the hallways, or any other “common areas.” What do you own? The interior walls, floors, and ceilings of your unit, as well as fixtures like sinks and cabinets.

With a co-op, you buy shares in a corporation that owns the building and property. And those shares allow you to live in one of its units.

Now you understand why co-op, condo, and homeowners insurance aren’t the same things, right?

The gist is you have more to insure when you buy a home, and less to insure when you buy a condo or co-op.

Keep reading to learn all about the differences between these insurance products. You’ll also learn about:

  • HOA insurance and how it’s different from home, condo, and co-op insurance
  • Co-op vs. condo vs. home insurance costs
  • How much homeowners, co-op, or condo coverage you should buy

The Differences Between Co-op, Condo, and Homeowners Insurance

The biggest difference between home, condo, and co-op insurance is how they deal with three main coverage types: dwelling, liability, and personal property.

Dwelling Coverage

Homeowners insurance and dwelling coverage

Dwelling coverage protects the physical structure of your home.

In the case of a standalone or attached home, the structure includes exterior and interior walls, its floors and ceilings. It’s every part of the building you can think of, basically.

This coverage also protects any structures that are connected to your home. That can include garages, porches, or decks. It may cover detached structures like sheds and gazebos, too. If a covered peril – fire, wind, or vandalism – damages your house or one of those “other structures,” this part of your homeowners insurance will repair it.

Make sure your homeowners insurance has enough dwelling coverage to rebuild your house and any other structures on the property. This dollar amount is known as your home’s replacement cost, and it’s vital that your dwelling coverage matches it. Fortunately, calculating your home’s replacement cost is relatively simple.  

Co-op or condo insurance and dwelling coverage

You don’t need as much dwelling coverage for a condo or co-op like you do for a house.

That’s because you don’t have to worry about insuring your unit’s exterior walls, hallways, other common areas, or land. Your condo association’s or co-op board’s “master policy,” which you’ll learn about in a minute, covers all of that. You usually only need to insure its interior walls, ceilings, floors, and permanent fixtures.

With a co-op, you might only have to insure the drywall, permanent fixtures, and any improvements you make.

Long story short, when you’re eyeing up a co-op or condo hazard insurance policy, make sure it provides enough dwelling coverage to let you repair your unit’s interior if a covered peril ever damages it.

Want to learn more? Check out our article on the best condo home insurance.

Liability Coverage

Homeowners insurance and liability coverage

Liability coverage protects you from lawsuits for bodily injury or property damage you or family members cause. It also covers damage your pets cause.

To put it another way, this part of your homeowners insurance policy kicks in if a guest is injured while in or around your house. It also kicks in if you damage someone else’s property or belongings while away from home.

You don’t just need this type of coverage for visitors who might get injured inside your home. You also need it for those who might get injured outside it, too. Common examples include while playing in your yard, swimming in your pool, or jumping on your trampoline.

Due to that, homeowners usually need more liability coverage than people who own condos or co-ops.

To learn more about this, read our article on homeowners insurance liability coverage.

Co-op or condo insurance and dwelling coverage

When you own a condo or co-op, you only need to worry about:

  • People getting injured while inside your unit
  • Damaging someone else’s property while away from home

If someone hurts themselves walking down the hallway or playing around in common areas, your co-op’s or condo’s master policy will deal with the fallout.

Because of that, co-op and condo owners might be able to get away with less liability coverage than homeowners. But it’s still vital that you have some form of liability coverage.

Personal Property Coverage

Homeowners insurance and personal property coverage

This part of your homeowners policy covers all of the belongings you own. That includes furniture, electronics, clothes, jewelry, and more. It can even cover belongings outside of your home, like a stolen cellphone. Though you might need a rider if you have some especially valuable items.

Personal property coverage protects the plants, shrubs, and trees on your lawn, too.

So, if fire, hail, lightning, or some other peril damages any of those things, or if someone steals them, this type of coverage chips in for repairs or replacements.

Co-op or condo insurance and personal property coverage

The only real difference between homeowners and condo or co-op insurance and personal property coverage: co-op or condo owners usually have fewer “things” to protect.

After all, houses tend to be larger than condos or co-ops. That allows homeowners to fill them with more stuff. Also, homeowners often have trees, shrubs, and plants to protect. Condo or co-op residents with lots of belongings may instead rent a storage locker.

Still, most condo or co-op owners have plenty of belongings. And to secure them from theft, damage, or destruction, they need adequate personal property coverage.

How do you know how coverage is enough? You create an inventory of your possessions. And then you buy enough personal property coverage so you can repair or replace them if needed.

HOA Insurance and How it’s Different from Home, Condo, and Co-op Insurance

When you buy a condo or co-op, you don’t own the land, exterior walls, hallways, or shared common areas.

What protects those parts of the property? The master policy that’s managed by your homeowners association, condo association, or co-op board.

Some people call this kind of coverage “HOA insurance” – even if it’s for a co-op or condo.

Regardless, it covers damage and destruction to things like a building’s roof, stairways, elevators, fitness center, and pool. It covers accidents that occur in those public areas of the property, too.

One last thing: although your condo association or co-op board manages this policy, you help pay for it via your fees or assessments.

The Costs of Home, Co-op, and Condo Owners Insurance

How much does homeowners insurance cost? It’s hard to say. Your exact home insurance rates depend on quite a few different factors.

One of the most important factors in your premium is where you live. You might pay just $600 or $800 a year for a policy if you live in states like Ohio or Utah, according to Progressive. And you might pay as much as $2,000 a year if you call Texas, Florida, or Louisiana home. Those states have quite a few insurance risks like bad weather.

On average, though, you can expect to pay roughly $1,000 per year to insure a house.

You’ll pay a lot less than that for co-op or condo insurance.

In fact, most sources say co-op and condo insurance costs between $100 and $600 per year. On the high end, that’s about half of what homeowners insurance costs.

Admittedly, that’s quite a range. Why? Many factors determine the price of this kind of coverage. Among them:

  • Where you live
  • Age and condition of your condo or co-op
  • Materials used to build your condo or co-op
  • How much your condo association’s or co-op board’s master policy covers
  • How much your personal property or belongings are worth
  • Coverage types and limits you choose
  • Your claims history

How Much Homeowners, Co-op, or Condo Insurance Should You Buy?

Again, it’s difficult to make any kind of specific recommendation here. It ultimately depends on you, your living situation, and your personal needs. At minimum, you should have enough belongings coverage to protect all your stuff. And if you own a house, you need enough dwelling coverage to match your home’s replacement cost.

If you’re a co-op or condo owner, though, ask yourself the following as you shop for an insurance policy:

  • What does and doesn’t your condo association’s or co-op board’s master policy cover?
  • Which parts of your unit do you personally own?
  • How much will it cost to repair or replace those parts of the unit if they’re damaged or destroyed?
  • How much are your possessions or belongings worth?

Use your answers to those questions to come up with your dwelling and personal property coverage limits.

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