How Much Condo Insurance Do I Really Need?
Enough to rebuild your unit's interior, replace your belongings, and cover the HOA's master policy deductible if it bills you back.
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Where the HOA's policy ends and yours begins
The HOA's master policy covers the building itself, the roof, the walls, the land. Where it stops depends on the HOA's bylaws, and most draw the line at your drywall, meaning everything from the paint inward is your job. An HO-6 policy insures your floors, cabinets, fixtures, and any upgrades you've made. It also covers your furniture and belongings. Your coverage amount should match what it would cost to rebuild that interior from scratch, not what you paid for the unit. If you're not sure where the HOA's responsibility ends, your governing documents or the HOA itself will say, and that line determines how much dwelling coverage you actually need under your own policy.
A master policy with a high deductible means the HOA can bill every owner a share after a claim, sometimes a few thousand dollars each. Loss assessment coverage on your HO-6 picks that up, and limits vary a lot between policies priced the same. If a neighbor's pipe floods your unit, your policy responds first regardless of fault. Comparing policies now shows where those limits actually sit.
What happens after a loss, step by step
Say a pipe bursts in the unit above yours. Water comes through your ceiling, ruins your flooring, and soaks a closet full of clothes. Your HO-6 policy is the one that responds, not your neighbor's and not the HOA's, because the damage is inside your unit. Your insurer pays to repair your drywall, replace the flooring, and cover your belongings, then may pursue the neighbor's insurer to recover what it paid. You're not waiting on that recovery. Your claim moves forward on your own policy regardless of how the fault gets sorted out later.
Loss assessment works differently because it isn't about damage to your unit at all. If a fire starts in the building's shared stairwell, or the roof fails in a storm, that's the master policy's problem to fix. But if the damage exceeds what the master policy covers, or the deductible on that policy is large, the HOA can assess every owner a share of the shortfall. A $50,000 deductible split across twenty units comes to $2,500 each. Loss assessment coverage on your HO-6 reimburses you for that bill, up to whatever limit you carry. Many policies default to a modest amount, often too low to cover a real assessment, so it's worth checking the number on your declarations page against what a special assessment might realistically run.
Townhome insurance can mean something different depending on how the property is structured. Some townhomes are part of an HOA with a master policy, much like a condo, in which case you'd still want an HO-6 and the same loss assessment thinking applies. Others are standalone properties with no shared structure or master policy at all, where the owner insures the whole building the way a single-family homeowner would, under an HO-3 policy. If you're buying a townhome, the HOA's governing documents or the listing agent should tell you which situation you're in, since the type of policy you need depends entirely on it.
One more gap worth knowing about is loss of use, sometimes called additional living expenses. If your unit becomes unlivable after a covered loss, this part of your HO-6 pays for a hotel or temporary rental while repairs happen. It's easy to overlook when comparing coverage amounts because it doesn't show up until you actually need it, but it matters as much as the dwelling and personal property limits do.
What am I missing if I just insure the basics
Most people set up an HO-6 policy by picking a dwelling number that sounds about right and a personal property number that matches the last renter's policy they had. That leaves gaps that only show up after something goes wrong, usually at the worst time to discover them.
Betterments and improvements coverage is one of them. If a previous owner upgraded the kitchen or you put in new flooring after buying, that value needs to be reflected in your dwelling coverage specifically, not assumed into a generic number. An HO-6 policy with coverage set too low to account for upgrades means a shortfall at claim time, paid out of pocket, even though you were insured.
Liability coverage is another. If someone is injured inside your unit, or your unit causes damage to someone else's, your HO-6 liability coverage responds, separate from the HOA's. The master policy generally covers liability for common areas like hallways and the parking lot, not what happens inside your four walls. A standard liability limit is often enough for most households, but anyone with meaningful savings or assets worth protecting should look at whether that limit is high enough to actually cover a serious claim.
Ordinance or law coverage is worth a look too, especially in an older building. If a covered loss triggers a rebuild and current building codes require upgrades the original unit didn't have, like updated wiring or fire safety features, this coverage pays the difference. Without it, you're covering the cost of code compliance yourself, on top of the original repair. None of these show up as a single line item labeled 'the important one' on a quote. They're worth checking individually against your declarations page, because the base HO-6 price looks similar whether or not these pieces are actually included.
Before you compare policies
Pull up your HOA's bylaws or master policy summary and find where the building's coverage stops. That one line tells you what dwelling amount your own HO-6 actually needs to carry.
