Renters vs. Condo Insurance: What’s the Difference?
Did you know that 98% of home insurance claims are filed with insurance companies due to property damage?
That should tell you that insurance coverage for your property is important, regardless of the type of home you live in. But the type of insurance coverage you have does indeed depend on where you live.
By where you live, we mean the type of dwelling in which you reside and whether you rent or own. And while homeowners insurance is relatively straight forward, condo insurance versus renters insurance, and the differences between them, are quite complex.
Before you sign any policy, keep reading to learn more about the differences between renters and condo insurance.
To put it simply, if you rent where you live, then renters insurance applies to you. Renters insurance is an insurance policy that is designed for tenants who rent or lease their living space from another person or entity.
If you own a home, you need to cover both the inside and outside of your dwelling. This is accomplished through homeowners’ insurance, wherein the policy covers the actual building in which an individual resides.
But if you’re renting, you’re not responsible for the building. All you need to cover are the personal belongings you have stored in there. You’ll also need liability coverage in case of unintentional damage to the building or anybody inside your home.
Renters Insurance Coverage
What exactly does renters insurance cover? A basic insurance policy will cover personal property, personal liability, and medical payments, as well as loss-of-use. We’ll explain each of these in more detail below.
Personal Property Coverage
In 2018, fires caused $6.5 billion worth of loss in one- and two-family homes. An additional $1.5 billion occurred in apartments, condos, and other multifamily dwellings.
Fire is typically a covered peril as are falling objects, thefts, and vandalism. In case your belongings are damaged or destroyed by any of the above, the personal property portion of renters insurance has you covered.
While you won’t get your property back, you’ll be given the monetary value of your loss. That amount is usually subject to limits, which are outlined in your policy when you purchase it.
This is why you need to be sure to choose an amount of insurance that reflects the value of your personal property. You may also consider optional coverages, such as added peril, coverage for items such as jewelry and fine art, or replacement cost coverage. These coverages will result in increased premiums but ensures you receive the exact value of things that were lost.
Before you receive that reimbursement, you’ll also be expected to pay the deductible. This is the amount that you have to cover out of your own pocket before your insurance kicks in.
Liability Protection Coverage
Your landlord’s insurance policy includes liability insurance for your rental property. But the liability coverage on your landlords policy is to cover their own liability should something happen to their tenant, and they’re found responsible.
Your liability isn’t covered under the landlord policy, which means that you’re responsible for having your own personal liability coverage as a renter.
Personal liability coverage on a renters insurance policy helps you pay for the medical bills of another person if you’re found responsible for their accidental or unintentional injuries. For example, if a guest falls down your stairs, your renters insurance helps with the medical payments.
It also helps pay for repairs to property if you’re found responsible for property damage on another person’s property. For example, if your child throws a ball that breaks through a neighbors window. Another example would be if a fire caused damage to the place that you’re renting.
Just like your personal property coverage, liability coverage has its own limit. This limit is also separate from the personal property limits.
This type of coverage covers the cost of having to live somewhere else if you’re unable to live in your home as the result of a claim that is covered in your policy. This coverage begins at time of claim and ends until your rental is repaired. It should be noted this is also limited to the amount of coverage in the policy.
If you own your condominium, then condo insurance is the type of insurance coverage you’re looking for. This differs from renters insurance in that there are two types of condo insurance: one that’s paid by you and one that’s paid by the Condo Association.
If something happens to the building that a renter lives in, that’s not covered by their insurance. Because they don’t own their property, only the contents inside, they’re not responsible for what happens to the structure.
But a condo is part of the greater condominium building. Condo insurance policies take into consideration those shared walls, floors, and ceilings. For this reason, a condo building is insured by its own insurance policy.
Called the Master Policy, this property insurance policy covers the structure and complex of a condo (i.e., what’s outside the studs of your unit or the building itself). As a condo owner, you have this insurance as well as your personal condo insurance. The latter covers everything that’s not covered under the master policy.
Condo Insurance Coverage
Your personal condo insurance protects your personal property should anything happen as the result of a covered peril. It also covers personal liability for medical payments and property damage.
But how much coverage you actually need is dependent on your master policy. We’ll explain this in more detail below.
The Master Policy
The Master Policy is the insurance on the entire condo complex. It’s paid for by you and every other owner in the building.
This policy covers damage to the building itself, including the exterior of the structure, elevators, and common areas. It may also cover things inside your condo that come with the unit.
Whether the master policy covers things inside of your unit will differ depending on whether the master policy is an all-in or walls-in policy. An all-in policy will cover plumbing, appliances, and flooring, whereas a wall-in master policy doesn’t include any of the items inside of your unit in the event of a covered loss.
Your personal condo insurance policy should cover anything that’s not covered by the master policy. The chances are that it includes protection for your own personal property as well as liability. It’s essential to know the details of the master policy in deciding what else you need to cover inside of your unit if anything at all.
Personal Condo Insurance
Some master policies have coverage for personal belongings and even for liability. If it does, you may not need to purchase a personal condo insurance policy. If it doesn’t cover these items, or it only covers them to a limited extent, you need a personal condo insurance policy that fills those gaps.
Your personal condo insurance protects your personal belongings in case of a covered peril or theft. This policy should also include liability coverage in case someone is injured in your home. These are similar to renters insurance, but you might be able to reduce your costs depending on what the master policy offers.
Your condo insurance should also include dwelling coverage. While this is also something that’s found in the master policy, dwelling coverage can be extended to include any fixtures, appliances, or other permanent upgrades that you’ve installed yourself and that don’t come standard in your unit.
Loss Assessment Coverage
Your personal condo insurance policy should also contain a loss assessment portion. This coverage is for any damage that you may cause to the collectively own parts of the condo building.
The Similarities Between Renters and Condo Insurance
Although different, there are two similar features between renters and condo insurance.
Both renters and condo insurance include protection for your personal property. In both cases, this includes items like clothing, furniture, toys, and electronics. A renter should buy a policy on these things based on the value of the items in their rental unit, whereas a condo owner should only insure what’s not covered by their master policy.
Renters and condo owners also share personal liability in common on their respective insurance policies. If anything happens to a tenant of a rental unit, the liability is covered by the owner of the unit.
But renters have to have liability insurance to cover medical expenses or property damage for situations wherein they’re found responsible. Condo owners also have to have liability insurance in case someone is injured while on their property. This type of coverage can also help with the costs of lawsuits, whether you’re a renter or a condo owner.
What’s The Main Difference Between Renter and Condo Insurance?
One difference between these two types of insurance is that renters insurance doesn’t cover the building or structure in which their unit resides. A condo owner has insurance on the condo complex as part of the master policy, as well as their own personal condo insurance policy. Condo owners pay for the master policy collectively with the other owners of the condo building.
In addition, renters insurance and personal condo insurance cover the inside of the unit, to a degree. For renters, that means that what they own inside of the unit is covered (i.e., their personal belongings). For condo owners, this comes down to dwelling coverage.
Dwelling coverage is the main distinguishing factor between these two types of policies. Condo owners need to cover their own personal belongings plus betterments and improvements.
This refers to anything not covered by the master policy but that the condo requires to be functional—for example, heating and air conditioning.
Are Renters or Condo Insurance Required by Law?
While it may not be required by law, you’ll likely need a personal condo insurance policy in order to purchase your condo. In fact, most mortgages require you to have insurance before your closing date. As far as the master policy is concerned, the Condo Association will require you to pay into that insurance just like every other owner in the complex.
Renters insurance isn’t required by law. However, it’s not uncommon for landlords to ask you to purchase renters insurance before signing a lease. It’s also in your best interest as you’re belongings and liability are not covered under your landlord’s insurance policy.
Looking for the Insurance You Need
So how do you know what type of insurance you need? It’s simple:
- When you don’t own the place in which you live, and you have a lease with a landlord or leasing company, you’re a renter
- if you own your condominium, you’re a condo owner
Renters require renters insurance, and condo owners may require condo insurance, depending on the extent of their master policy. And, if you’re renting a condo and it’s owned by someone else, you’re still considered a renter.
Make sure that you purchase the right insurance for where you live. If you’ve purchased renters insurance as a condo owner, this is extremely important.
Without the right insurance as a condo owner, you’ll be responsible for replacing not only your personal belongings, but also items such as appliances, fixtures, and potentially even floors and ceilings, depending on the master policy. A renter with the incorrect insurance isn’t only not adequately insured, but they’re also paying far more than they should be.
The Best Condo Insurance and Renters Insurance
The difference between condo insurance and renters insurance comes down to more than just cost.
A renters insurance policy covers the tenant of a rental unit only, and it does not provide coverage for the entire structure. The policies protect personal belongings, liability, and medical payments, as well as loss-of-use coverage.
Condo insurance, on the other hand, is for the condo unit owners. A personal condo insurance policy will depend on what’s covered by the master policy. In most cases, it covers personal belongings, liability, and of course, dwelling coverage.
Insurance is complicated in and of itself, but navigating these differences can be even harder, depending on your circumstances. Before signing on the dotted line of your policy, make sure you understand what you are buying. Contact your insurance agent and ask any questions you might have,
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