If you buy a condominium or are renting an apartment or home, you have different options for home insurance policies. However, you can still expect similar protection of your home and/or its contents, as well as reimbursement options as homeowners selecting other policy types (see “Types of Homeowners Insurance Coverage” for more information).

Renters Insurance

If you are a renter, you may think that you have no use for some type of home insurance coverage, since the owner is required to carry insurance on his or her commercial coverage. Additionally, you may think it is costly, since homeowners insurance adds up annually. Finally, you think that you are not materialistic, and if you lost all of your possessions in your apartment because your neighbor in unit 206 started a fire that spread to the entire building, you would not be shocked or disturbed.

Of course, you might feel differently if the fire did burn down your building or you find that the commercial coverage does not cover your personal losses. You may feel even more sheepish if you knew that renter’s insurance is typically $140-250 per year on average.

Renters insurance (also known as the HO-4 policy) covers the contents of your rental unit in the even of fire, smoke, lightning, vandalism or theft, explosion, windstorms and water damage not related to a flood. Much like homeowners insurance, if someone experiences a slip and fall and attempts to make you legally liable, renters coverage will protect you against such claims. Finally, if you are forced to relocate due to any of the disasters mentioned in your policy, your expenses are covered.

Condo Insurance

Although you are a property owner if you buy a condo, it is not detached from your neighbors, making it similar to an apartment. You may have owner's liability for parts of your unit, while your condominium or homeowners association may have liability for other parts of the community you live in, or segments of a building that you share.

Because of the way condos are shared, condo insurance is made up of two parts. First, you will have your own insurance policy. For condo owners, it is known as an HO-6. Similar to homeowners insurance, it provides disaster coverage for your home, its contents, any liability protections, and temporary relocation. Second, your condominium association must have a “master policy” covering common areas you share with the community.

In addition to the types of policies, you also have options with regard to monetary value of the reimbursement, including actual cash value (your home’s value less depreciation); replacement costs (entire cost of rebuilding and/or replacement of your home and its contents with no depreciation), or guaranteed/extended--which will cover all of the costs of replacement and repairs of the home to its pre-damaged condition beyond policy limits as necessary.

However, with a renters policy, there is no option for guaranteed or extended reimbursement. You can however get an additional floater or personal items policy for specific valuables or to add additional coverage not available in your policy.


References

Seton Hall Law School. Renters Insurance Information.
Sally Anderson. The Scoop on Rental Insurance.
Insurance Information Institute. What type of insurance do I need for a co-op or condo?
Utah State University. Take Charge of Your Money.