If you’re a buy and hold rental property investor and you own a condominium, you’ll want to make sure that you have the right coverage since buying condo insurance is different than buying single family home insurance. Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free In order to mitigate the risk of damage or loss to your rental property, here are some important things to consider when selecting your condo insurance policy. Understand the Terms Insurance companies offer different coverage for different properties based on the terms defined in your insurance policy. For example, coverage differs greatly between a condominium and a single family home. The coverage also differs on whether or not the property is defined in the policy as your primary dwelling or rental property. Read and reread the terms and conditions for any condo insurance policy before agreeing to their terms. You want to ensure that you are selecting the policy that best covers your investment from loss or damage. HOA Coverage vs. Personal Property Coverage Condominium insurance differs from single family home insurance in that condo owners share insurance liabilities with the condo’s homeowner’s association (HOA). Because of this, it can be difficult to understand which policy covers what events and damage. Personal property condo coverage generally includes: Interior structure A condo owner’s personal property insurance is responsible for everything within the interior structure, starting at the studs and working your way in. Any damage that occurs to the electrical, plumbing, floors, drywall, fixtures, and appliances, for example, falls to the property owner and needs to be covered under their personal property insurance. Related: Thinking About Investing in a Condo? Stop! And Read This First… If the condominium is a rental property, however, you will not need to have as much coverage for personal belongings since that liability will fall to the tenant under their rental insurance. Loss assessment Loss assessment is a type of coverage that offers protection against damage caused to common areas owned by the condo’s homeowner’s association. If severe damage to HOA property exceeds the covered losses to the buildings or common areas, you and all other members of the HOA may need to supplement the difference to pay for repairs. If you have loss assessment coverage, you won’t have to pay for your portion of the repairs out of pocket. Pools, elevators, common areas, and recreation areas, for example, would fall under this coverage. Liability coverage Your personal property insurance coverage should also cover liability in the event that a person gets injured or their belongings become damaged while within your condo. This liability coverage helps cover the bills in case you’re held responsible for their injuries. Loss of use If your condo becomes uninhabitable due to a loss covered by your overall policy, this coverage can provide you with the fair rental value of the property. HOA insurance master policies generally cover: Exterior structures, common areas, and grounds While your personal property coverage is responsible for everything within the interior structure, your HOA’s insurance is responsible for every exterior structure, including the roof, exterior walls, grounds, community buildings, and shared amenities. The specifics of what an HOA’s master policy will cover varies by association, so it’s important to review the master policy thoroughly. Make sure that you understand the bylaws of your HOA as well as the details of their insurance coverage. Ask about flood, water, and natural disaster coverage, so that you understand what you will be responsible for as a condominium owner. Research whether you need flood insurance for your condo and if your community abides by FEMA’s recommendations under the new Homeowner Flood Insurance Affordability Act of 2014. If the master policy doesn’t include flood insurance, you may need to ensure that you’re covered under your individual insurance policy or a supplemental food insurance coverage policy. Understand the Best Coverage by Region Many different factors affect how much your condo insurance premiums will be. Your location, the age of the structure, and its vulnerability to natural disasters, for example, all play into how high (or low) of a premium your insurance company will offer. If your condominium is located in an area frequently affected by natural disasters, you can expect your insurance premiums to be higher. In fact, if you live in Florida, Texas, or Louisiana, you can expect to pay some of the highest premiums in the country. If you would like to do more research how your region will affect your coverage, the National Association of Insurance Commissioner’s (NAIC) latest homeowners insurance report provides the most recently validated data on market distribution and average cost by policy form and amount of insurance. Related: Real Estate Insurance 101: How to Best Protect Your Investments Compare Quotes When looking for condo insurance, it will be in your best interest to receive quotes from several different insurance companies. State Farm, Travelers, Liberty Mutual, Geico, and Progressive are of course some of the bigger and more well-known insurance companies that offer condo coverage. However, it might serve your interests to conduct a quick search of the Better Business Bureau to find a highly rated insurance company local to your area. The National Association of Insurance Commissioners also recently published a comprehensive list of the “Property and Casualty Insurance Industry 2015 Top 25 Groups and Companies by Countrywide Premium.” This study can be helpful in guiding your decision on which company to trust with your insurance coverage. Once you have quotes from several different companies, assess the coverage offered by the policy compared to price and the deductible. When you’re armed with quotes and policy coverage plans from other companies, you can use those policies as a tool to perhaps receive more coverage for a lower cost from a company’s competitor, saving you money on insurance in the long run. Do Your Homework Finding the right policy for your condo can be a time-consuming and frustrating task, but doing the research and making sure you have enough (but not too much) coverage will save you a lot of money down the line. Remember always to request a copy of the master policy so you can see what is and is not covered by your HOA. Research whether or not you need flood insurance, and always compare quotes from multiple companies before settling on a policy. Investors: Any questions about insurance policies for condos? Leave your comments below!