Homeowners insurance vs. co-op insurance

When you purchase a home or condo, you own the structure with a deed to prove it. With a co-op, you are not a homeowner but rather a shareowner of the corporation that owns the building. A co-op is a housing cooperative owned by a corporation that allows people to buy shares in exchange for access to the units and amenities within the property. A co-op is more like a rental agreement, where you are the tenant and the building owner is the landlord. Your shares do not translate to real property like owning a house or condo does. Instead, your shares are treated as personal property.

A standard homeowners insurance policy covers the entire structure of a home, plus your personal belongings. Because you do not actually own the building when you live in a co-op, you cannot get and do not need traditional home insurance. With co-op homeowners insurance, your policy only covers the unit you own shares in, usually from the studs in. The co-op master policy purchased by the corporation insures the exterior of the building plus the exterior of your unit, including common areas and hallways. Not all master policies are the same, so it may be important to review the master policy to see which parts of the structure are covered so you can get co-op insurance to cover what you are responsible for.

Homeowners insurance vs. condo insurance

Buying a condo is more similar to buying a home than a co-op. When you buy a condo, you own the unit and likely need condo insurance to insure it properly. However, insuring a condo is more similar to a co-op than a home because you are only responsible for insuring your unit, not the entire building. Instead, the condo association’s master policy will take care of the common areas and building structure, just like a co-op master policy. Both co-op and condo home insurance usually include coverage for liability and additional living expenses, though, just like a homeowners policy.

Condo unit owners and co-op shareholders may want to consider adding optional coverage for loss assessments. Homeowners who live in a homeowners association might also want to consider this coverage. Loss assessment coverage may help pay if you are assessed for a covered claim, which is a fee assessed to all units to cover the deductible and other amounts paid by the association. For example, a large tree fell during a windstorm and damaged parts of the common area, including the roof of a building. All unit owners could be assessed the same amount to cover the $15,000 deductible listed on the master policy.

What do home, co-op and condo insurance cover?

Most HO-3 homeowners insurance policies include dwelling coverage, which insures the structure of your home, including roof, windows and walls. These policies also typically include other structures coverage for additional structures on your property as well personal liability, personal property, guest medical payments and loss of use (additional living expenses).

Condo and co-op insurance policies work a bit differently. In most cases for both, a master policy covers structures, while personal policies held by each resident will typically cover the other more individual coverage types listed above. While coverage types and limits may vary by policy type and carrier, the table below summarizes what is typically covered under each insurance policy type.

Is condo insurance more expensive than homeowners insurance?

There are a variety of costs that factor into your insurance policy’s premium, including your level of coverage, your specific home, your location and your personal rating factors. Standard homeowners insurance policies include the cost of dwelling coverage, but this coverage is typically included in a condo or co-op’s master policy. This key coverage difference will typically lower the cost of condo or co-op insurance relative to a homeowners insurance policy in the same area.

While a condo or co-op insurance policy does not usually include dwelling coverage, those living in a building that includes other units may have additional costs, such as HOA or co-op fees. These are typically used to pay for the HOA or co-op master insurance policy, among other costs.

Ultimately, whether homeowners, condo or co-op insurance is more expensive will depend on the type of property you live in, your location and your personal rating factors. To give you an idea of what average homeowners insurance policy costs in 2023, the average premium is $1,428 annually for $250,000 in dwelling coverage.