What's the difference between homeowners insurance and condo/co-op insurance?

Author
By Brian OConnell

Written by

Brian OConnell

Finance writer

Brian O'Connell is an authority on business, personal finance, and financial education. His work has been featured by TheStreet.com, CBS News, The Wall Street Journal, U.S. News & World Report, Forbes, and Fox News.

Updated October 16, 2024, 2:38 AM EDT

Featured

Fox Money is a personal finance hub featuring content generated by Credible Operations, Inc. (Credible), which is majority-owned indirectly by Fox Corporation. The Fox Money content is created and reviewed independent of Fox News Media. Credible is solely responsible for this content and the services it provides.

Property buyers choosing between single-family homes and condominiums normally look at a laundry list of "to-do" items. Insurance should be high on that list, as protecting any residential property differs depending on what type of home you choose.

That’s the case with homeowners or condo/co-op insurance. In fact, there are significant differences between the two property models and types of coverages.

A BEGINNER'S GUIDE TO BUYING HOME INSURANCE

1. Homeowners insurance is a form of property insurance that covers losses and damages to an individual's residence, along with furnishings and other assets in the home.

"Homeowners insurance also provides liability coverage for accidents in the home or on the property," said Tyler Forte, chief executive officer at Felix Homes, a Nashville, Tenn.-based real estate services firm.

2. Co-op insurance is a type of property-liability insurance that covers losses and can cover damage for owners of a co-op.

"These policies generally cover losses to their building or individual units," Forte said. Another difference between homeowners insurance and insurance for your condo is the structure of the property being purchased.

"Homeowners insurance is for properties that the owner lives in and is responsible for the entire structure," said Greg Martin, president of Think Safe Insurance, LLC, in Brandon, Fla. "These are usually covered by specific home insurance policies."

Co-op or condo insurance is for condo units or owned units in a building where a portion of the building may be covered by an association or master policy.

DOES YOUR HOMEOWNERS INSURANCE COVER EMERGENCIES

"These are usually covered under a specific policy and can be owner-occupied or rental units with specific endorsements," Martin said. "Townhomes can require either type of policy, depending on if the association covers anything, and what type of policy they require owners to carry."

How homeowner’s insurance and co-op insurance differs

The distinctions between homeowners and condo insurance go even deeper. Here are the main differences between the two:

1. Single-owner versus multiple owners: Home insurance is for single-family homes, which is completely different from a co-op insurance policy.

"A co-op insurance policy is designed to cover the building, common areas, and sometimes the individual units of a multi-unit building that's owned by the building owners," said Earl Jones, founder of the Earl L. Jones Insurance Agency in Sunnyvale, Calif. "Whereas a homeowners insurance policy is just owned by the homeowner, the co-op insurance is owned by all of the unit owners."

2. Co-op insurance doesn’t have to cover as much ground: Another major difference between standard homeowners insurance and co-op insurance is the dwelling coverage.

"In most instances the owner of the co-op building will have coverage that takes care of the exterior structure and common areas like hallways," Forte said. "Like homeowners insurance, co-op insurance covers items inside an individual unit, which includes interior walls, fixtures, personal property, and liability exposures."

3. No personal insurance coverage for co-op owners: A co-op may limit liability coverage to just the common areas only, leaving the unit owners responsible for not only their personal liability but also the liability of their guests, pets and children.

"That’s not the case with a homeowner’s insurance policy, which covers the entire home and liability," Jones said.

4. Pricing is different, too: The cost of homeowners insurance and co-op insurance is totally dependent on how much coverage you need.

"If you have a $1,000,000 home filled with furniture, expect to pay substantially more than someone that owns a $200,000 co-op that’s sparsely furnished," said Lamar Brabham, CEO and founder of Noel Taylor Agency, a financial services firm located in North Myrtle Beach, South Carolina. "On average, however, a co-op policy will run about $475 annually and a homeowner’s policy will run about $1,500 annually."

HOW TO GET THE BEST HOMEOWNERS INSURANCE POLICY FOR YOUR NEEDS

When you’re buying a policy

Buying either a homeowners or co-op insurance policy requires some unique features – and that means conducting solid due diligence.

1. For homeowner’s insurance

When it comes to home insurance, consolidate as much insurance as possible. "In a good majority of the cases, bundling home and auto will give people the best rates," Jones said.

2. For co-op insurance

Study the master co-op insurance policy. "Individual co-op unit owners need to know what's covered on the master co-op policy," Jones said. "Don’t assume it includes the interior of the individual units. Often, there's little to no coverage on the master plan to rebuild the interior of their unit in the event of major damage, which forces the unit owner to pay out of pocket."

"A deductible of $5,000 is advisable when buying co-op insurance," Jones added.

HOW MUCH DOES HOME INSURANCE COST PER YEAR? HERE ARE THE US AVERAGES

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

Meet the contributor:
Brian OConnell
Brian OConnell

Brian O'Connell is an authority on business, personal finance, and financial education. His work has been featured by TheStreet.com, CBS News, The Wall Street Journal, U.S. News & World Report, Forbes, and Fox News.

Fox Money

Fox Money is a property of Credible Operations, Inc., which is majority-owned indirectly by Fox Corporation. This material may not be published, broadcast, rewritten, or redistributed. All rights reserved. Use of this website (including any and all parts and components) constitutes your acceptance of Fox's Terms of Use and Updated Privacy Policy | Your Privacy Choices.

Fox Money is a property of Credible Operations, Inc., which is majority-owned indirectly by Fox Corporation. This material may not be published, broadcast, rewritten, or redistributed. All rights reserved. Use of this website (including any and all parts and components) constitutes your acceptance of Fox's Terms of Use and Updated Privacy Policy | Your Privacy Choices.

*Credible Operations, Inc. We arrange but do not make loans. All loans are subject to underwriting and approval. Registered Mortgage Broker - NYS Department of Financial Services. Advertised rates are subject to change and may not be available at closing, unless locked with a lender