If you're shopping for a condo, you've probably heard conflicting advice about insurance. Some people say you need homeowners insurance. Others mention something called an HO-6 policy. And then there's your HOA's master policy to consider. So what's the real difference between condo and homeowners insurance, and which one do you actually need?
Here's the short answer: if you own a condo, you need an HO-6 policy, not traditional homeowners insurance (HO-3). But understanding why—and what coverage gaps exist between your policy and your HOA's—could save you thousands of dollars when disaster strikes.
The Core Difference: What You Own vs. What You Share
The fundamental difference comes down to property ownership. When you buy a single-family home, you own everything—the structure, the roof, the land it sits on, the driveway, even that rickety shed in the backyard. Homeowners insurance (HO-3) reflects this by covering all of it.
When you buy a condo, you're purchasing the interior space of your unit, not the building itself. You share ownership of the exterior walls, roof, hallways, pool, and common areas with all the other unit owners through your HOA. This shared ownership model is why condo insurance works differently.
Condo insurance (HO-6) is often called "walls-in" coverage because it protects everything from your unit's interior walls inward. This includes your personal belongings, any improvements or upgrades you've made, liability protection if someone gets hurt in your unit, and additional living expenses if you need to move out temporarily after a covered loss.
Meanwhile, your HOA's master policy covers the building's exterior, roof, common areas, and shared spaces. But here's where it gets tricky: not all master policies cover the same things, and the gaps between what your HOA covers and what you're responsible for can be expensive.
Understanding Your HOA's Master Policy
Before you purchase your HO-6 policy, you absolutely need to know what type of master policy your HOA carries. There are three main types, and each one leaves you responsible for different things:
Bare Walls-In policies are the most basic. The HOA covers the building structure and common areas, but nothing inside your unit—not even the paint on your walls or the flooring under your feet. If a pipe bursts and ruins your carpet and drywall, you're covering all repairs yourself.
Single Entity policies cover the structure plus original fixtures and finishes that came with your unit when it was built. But if you've upgraded to granite countertops or installed custom lighting, those improvements aren't covered by the master policy.
All-In policies provide the most comprehensive coverage, including fixtures, appliances, and even upgrades you've made. However, your personal belongings—furniture, electronics, clothing—still aren't covered under the master policy.
Many condo owners make the mistake of assuming the HOA master policy will cover damage to their unit. In reality, depending on your master policy type, you could be on the hook for tens of thousands in repairs after a fire, flood, or other disaster.
Critical Coverage Gaps You Need to Fill
Even with an all-in master policy, significant gaps exist that only your personal HO-6 policy can address:
Loss assessment coverage is critical but often overlooked. When a major claim hits the building—say a hurricane damages the roof—and the repair costs exceed the master policy's limits or the HOA can't afford the deductible, the remaining balance gets divided among all unit owners as a special assessment. Without loss assessment coverage on your HO-6 policy, you could receive a bill for $10,000 or more with just 30 days to pay.
Personal liability protection through your HO-6 policy covers you if someone is injured inside your unit or if damage originating from your home affects a neighbor's unit. If your dishwasher leaks overnight and ruins the hardwood floors in the unit below you, your liability coverage handles the claim.
Additional living expenses become crucial when your unit is uninhabitable after a covered loss. Your HO-6 policy pays for temporary housing, meals, and other increased costs while repairs are being made—coverage the master policy doesn't provide for individual unit owners.
Cost Comparison: What You'll Actually Pay
One of the few upsides of needing specialized condo insurance is that it costs significantly less than traditional homeowners insurance. The national average for HO-6 condo insurance is about $490 per year, or roughly $40 per month. Compare that to homeowners insurance, which averages $2,601 annually—more than five times as much.
The reason for this price difference is straightforward: you're insuring much less property. Your HO-6 policy doesn't need to cover the roof, exterior walls, foundation, or land—the most expensive parts of a property to insure and repair.
That said, costs vary dramatically by location. In Florida, condo insurance averages about $995 per year due to hurricane risk, while Wisconsin condo owners pay an average of just $276 annually. Miami represents the extreme high end at $2,280 per year, while Minneapolis comes in at $430.
Your specific premium depends on your coverage limits, deductible, location, claims history, and natural disaster risk in your area. The amount of personal property coverage you need and whether you've made expensive upgrades to your unit also factor into pricing.
What's Actually Covered: Side-by-Side Breakdown
HO-3 homeowners insurance covers the dwelling itself (your entire home structure), other structures on your property like detached garages or sheds, personal property, liability protection, medical payments to others, and loss of use if your home becomes uninhabitable.
HO-6 condo insurance covers the interior of your unit (walls-in), your personal belongings, improvements and upgrades you've made to the unit, liability protection for incidents inside your unit, additional living expenses if you're displaced, and loss assessment coverage for special assessments from your HOA.
Another technical difference: HO-3 policies typically offer open peril coverage for the dwelling, meaning they cover all risks except those specifically excluded. HO-6 policies generally provide named peril coverage, protecting only against specific events listed in the policy like fire, theft, or vandalism.
Getting the Right Coverage for Your Situation
Your first step should always be requesting a current copy of your HOA's master policy. Read through it carefully, or better yet, have an insurance agent review it with you. You need to know exactly where the HOA's coverage ends and your responsibility begins.
When shopping for your HO-6 policy, make sure you're covering the right amount. For personal property, inventory everything in your unit and estimate replacement costs. If you've made upgrades—new appliances, custom cabinetry, flooring improvements—document these with photos and receipts, then make sure your dwelling coverage is high enough to replace them.
Don't skimp on loss assessment coverage. Many policies offer $1,000 or $2,000 as a standard amount, but that may not be enough if your building faces a major claim. Consider increasing this to $25,000 or $50,000 for true peace of mind. The additional premium is typically minimal compared to the protection it provides.
If you're mortgage shopping and comparing a condo to a single-family home, factor in the insurance cost difference. That $2,100 annual savings on insurance premiums for a condo translates to about $175 per month—enough to make a meaningful difference in your housing budget and overall affordability.
The bottom line: condo and homeowners insurance serve different purposes for different living situations. Understanding these differences and the potential gaps in coverage helps you make informed decisions about protecting your investment and avoiding unexpected expenses. Get quotes from multiple insurers, review your HOA's master policy carefully, and choose coverage limits that actually reflect what you'd need to rebuild your life after a loss.
