Definition

• Condominiums are similar to apartments, consisting of multiple individual units in a building or complex, as well as areas such as courtyards and pools that everyone shares. The difference between a condo and an apartment is that individuals own the condo units. They might live in the unit themselves or might rent it out to others.
  
  

Condo Association Insurance Policy

• Each condo complex is governed by condo association bylaws that outline rules all owners must follow. These bylaws also provide details about homeowners insurance requirements.
  
  Generally, the condo association provides an insurance policy that covers common areas in the complex, such as the roof, elevator, walkways and community buildings. Condo owners pay monthly dues for this insurance policy, as well as for other costs such as grounds maintenance. In case of a claim, condo owners also might have to pay toward the insurance deductible.
  
  

Different Types of Coverage

• The condo association's insurance policy might or might not provide coverage for individual units. Sometimes the association insures individual units in their original state, and owners are responsible for insuring any alterations made to the unit. Other associations insure a unit's bare walls, floor and ceiling, while the owner insures all built-ins such as kitchen cabinets, appliances, fixtures, plumbing and wiring.
  
  Condo owners must read their association bylaws to ensure that they buy the right amount of insurance.
  
  

HO-6 Policy

• The insurance policy that a condo owner buys is called an HO-6 policy. In addition to providing the coverage condo owners need to protect their condo units, an HO-6 policy covers the owner's personal property. The condo association policy does not provide any coverage for personal property such as electronic equipment, furniture, linens or sports gear.
  
  

Cash-Value or Replacement Cost

• When you buy an HO-6 policy, you will be able to choose a cash-value or replacement-cost policy. A replacement-cost policy costs more in premiums, but it provides more coverage.
  
  With a cash-value policy, the insurance company depreciates your belongings before paying you for a claim. With a replacement-cost policy, you receive enough money to replace your belongings with no reduction in value for depreciation.