Renters insurance vs. condo insurance

Your personal condo insurance policy will protect everything your condo association’s master policy doesn’t cover.

Zack Sigel

Zack Sigel

Published September 5, 2018

Renters insurance protects renters from the risk that their belongings will be destroyed or stolen by reimbursing you for any covered loss. It also protects renters from any liability that emerges from someone getting hurt in their home. While renters insurance is not typically required by law, your landlord may require you to purchase coverage.

If you live in a condominium, however, you’ll need condo insurance, which offers similar protection from liability and reimbursements for personal property loss. Whether or not you need condo insurance depends on your personal needs as well as the bylaws of your housing association.

Your condo’s housing association will likely require you to purchase a form of condo insurance to protect the structure and complex of your condo; this is called a master policy. Your personal condo insurance policy will protect everything your condo association’s master policy doesn’t cover.

Renters and condo insurance differ because the latter is for people who own their condo, like homeowners insurance, while renters is for people who rent their home from someone else, like a landlord. Renters insurance also doesn’t cover damage to the structure of the building.

Read on to learn more about:

What does renters insurance cover?

Renters insurance has three major components: personal property coverage, personal liability coverage and medical payments to others, and loss-of-use coverage.

Personal property coverage

This coverage protects your belongings when they’re destroyed or lost in a covered peril, like fire, falling objects, or theft and vandalism. You’ll be reimbursed for the amount of the loss up to the limits of your coverage, minus any deductible, which is the amount you have to pay toward a claim before the renters insurance company will pay the rest. If water discharge ruins your $1,000 TV, and you have a $500 deductible, the renters insurance will pay you $500.

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Liability coverage and medical payments to others

These coverages will pay the medical expenses of anyone injured in your home for which you’re liable. These may stem from a medical bill that the injured party asked you to pay or from losing a lawsuit filed by the injured party. Liability coverage has a separate limit from property coverage.

Loss-of-use coverage

When your home becomes uninhabitable due to a covered peril, any additional expenses you pay to relocate while your home is being renovated or repaired may be covered by your renters insurance. A separate limit for this coverage also applies.

What does condo insurance cover?

Like renters insurance, your condo insurance should also cover damage to your personal belongings and any liability you incur when someone is hurt in your home. Your condo insurance policy, also known as an HO6, has a list of covered perils that look similar to that of a renters insurance policy, including coverage for perils like windstorms, fire, hail, lightning and theft.

The master policy

You only need enough condo insurance to cover what isn’t covered by your condo association’s master policy, which is the insurance for the entire complex jointly paid for by every resident. The master policy doesn’t offer personal property protection, and it may not offer liability protection either.

The master policy does cover damage to building itself, in what’s called dwelling coverage, similar to homeowners insurance. (Renters insurance doesn’t come with dwelling coverage.) That includes not only the exterior of the building but also structures like elevators and common rooms and items inside your condo that come with the unit.

If the condo association master policy is an all-in policy, then it covers fixtures like plumbing and appliances or flooring that are usually installed in the building prior to you moving in. The other most common type of master policy is a walls-in policy, which doesn’t cover anything contained within your condominium’s walls.

Your personal condo insurance policy

For property protection and liability protection, you may need to purchase your own condo insurance policy. The terms of this policy should fill in any coverage gaps left by the master policy.

When determining how much coverage you need for your personal condo insurance, figure out how much you master policy offers in both personal property protection and liability protection. It may be nothing, in which case you need to purchase enough coverage for all your belongings as well as enough liability coverage to insulate you from having to pay medical expenses or a lawsuit judgement out of pocket.

If your master policy already provides adequate coverage, you may not need to purchase an individual condo insurance policy. Check the terms of your insurance and talk to your condo association about what is and isn’t coverage. When the master policy is more robust, you can save money on your individual policy by reducing the amount of coverage you purchase.

Your HO6 will also come with dwelling coverage to supplement that of the master policy. While dwelling coverage typically refers to damage to the building structure, the dwelling coverage in your personal condo policy covers damage to fixtures and appliances you installed.

Loss assessment

A unique feature of condo insurance, loss assessment covers any damage you cause to the condo itself or any part of the complex collectively owned by the other members of the condo association.

Do I need renters insurance or condo insurance?

Whether you need renters or condo insurance depends on where you live. Generally, if you signed a lease with a landlord or leasing company and don’t own the home you’re living in, you’re a renter and need renters insurance. If you purchased a condo, you’re a homeowner, and don’t need renters insurance, but you may need condo insurance if your condo’s condo association doesn’t provide enough coverage.

You may be renting a condo owned by someone else. The condo owner may have insurance that covers your belongings, but many policies explicitly forbid coverage for people staying in the home when the owner isn’t living there. In this case, you need renters insurance. Renters insurance doesn’t require you to have a lease, so don’t worry about being covered if you’re rental is off the books.

If you’re not sure which type of home insurance you need, a licensed representative at Policygenius can help you choose the policy for your needs. You’ll be able to compare quotes from renters, homeowners, and condo insurance.

Replacement cost vs actual cash value

Both renters insurance and condo insurance have similar stipulations regarding how they pay out claims. The value of an item is determined byeither one of the following:

  • Replacement cost value (RCV), which values the item at the price it costs to buy new, without accounting for depreciation. If your $1,000 TV is destroyed in a covered peril, you’re getting a $1,000 TV in return, minus the deductible.
  • Actual cash value (ACV), which values the item based on the amount it costs to buy new, minus depreciation. If the TV that got destroyed cost $1,000 when you bought it but now costs just $500 to replace, you’re getting $500, minus the deductible.

With renters insurance, you can choose whether you want a replacement-cost policy or an actual-cash-value policy, with the former being more expensive because of the potential for higher payouts.

When your condo insurance has personal property coverage, whether the policy uses replacement cost or actual cash value depends on the master policy. If your condo association’s master policy only offers ACV, you may be able to purchase a personal condo insurance policy that offers RCV to supplement the master policy.

Riders and endorsements

Both renters insurance and condo insurance can be enhanced by purchasing a rider (or endorsement) that modifies and enhances the coverage contained the base policy. Typical endorsements include:

  • Scheduled property, which lets you add certain personal property items to your coverage that otherwise aren’t covered, or increases the limits of coverage for expensive items, like jewelry, that are capped at a limit.
  • Flood coverage, which adds flooding as a covered peril when it isn’t already covered. (Floods are usually excluded.)
  • Earth movement coverage, which adds protection from mudslides and earthquakes among other types of earth movement, which are typically excluded otherwise.
  • Business property coverage, which is needed if you run a business from your home, since business property usually has a low limit for coverage if it’s included at all.

Discounts for renters and condo insurance

Companies that sell renters insurance and condo insurance typically offer discounts on your premiums if you install certain safety features that reduce your risk of suffering damage or loss.

Typical discounts offered both types of insurance include:

  • Paying in full, which means you have to pay your premiums for the year up front and are typically 5% less than they’d be if you’d paid monthly.
  • Fire alarm discount, which may lower your premiums if you install a fire alarm or smoke detector. Discounts are even higher if the alarm connects directly to the fire station.
  • Deadbolt discount
  • Burglar alarm discount, which, like the fire alarm discount, could be even higher if it automatically connects to law enforcement.
  • Bundling discount, which allows you to save on your premiums if you purchase your renters or condo insurance from the same company you purchase you auto insurance policy.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.