Is property insurance required for a condo unit, even though the Condo has a Master Insurance?

Asked by Alex, Lorton, VA Wed Jun 20, 2012

I purchasing a condo unit in Virginia. On the loan application, the mortgage company added a line item for property insurance for $300. I understand having property insurance for single homes, but for condos, I thought the condo's master insurance would cover my unit, and the only additional insurance I would need to get is a renter's insurance.

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Matthew Goulden’s answer
Matthew Goul…, Agent, San Francisco, CA
Wed Jun 20, 2012
Hi Alex,

In general the HOA will have a master policy to cover the main structure and liability covering the HOA and its officers, you as an individual owner would need to carry a HO6 policy which covers your unit, contents and your liability if somehow something that happens inside you're unit that affects the building, i.e. your tub overflows and floods the unit below you. It is similar to renters insurance. Your HOA may have rules about minimum coverage.
1 vote
Lucy Logvino…, , San Francisco, CA
Mon Dec 3, 2012
Master HOA policy will never cover your unit inside (finishes, kitchen, fixtures) that's why HO-6 wall to wall coverage is required by lenders. In addition you have the liability and personal property coverage. You can't buy renters policy for the unit you own.
0 votes
Alex, , Lorton, VA
Thu Jun 21, 2012
Thanks all for your responses. It has been very helpful. First, I should have mentioned that th $300 is annually. Still I feel it's high since I pay slightly higher for a large townhouse. I spoke with the lender afterwards, and he explained that first they need to look at the HOA's policy and once they determine what's covered or not covered in their policy, they will advise what we need to purchase, if any.

As some of you mentioned, it's an HO-6 "Wall-in" policy, which covers the interior of the Unit (e.g. cabinets) and it needs to cover 20% of the loan, in this case $52K of the loan.

I don't have to choose their policy, I can shop around, which I intend to do.

Thanks again for your responses....Alex
0 votes
Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Wed Jun 20, 2012
Kevin is correct,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
0 votes
Gabriel Rojas, Agent, San Francisco, CA
Wed Jun 20, 2012

I would first start off by asking the mortgage company to explain why they are adding this cost to you, what it includes, and whether it is mandatory. As many here have stated, a master policy will cover the building itself and the items outside of your personal residence but, as a home owner, you are responsible for your own coverage with a home owners policy. I'm not sure why you would need renters insurance for a home you own.

Good luck with your home purchase!

0 votes
Cindy Davis, Agent, San Diego, CA
Wed Jun 20, 2012
You're correct Alex! Get a copy of the master insurance and send it to the lender, and escrow...

As others have stated...prices may be off but you have the general thought down correclly.
0 votes
Lance King, Agent, San Francisco, CA
Wed Jun 20, 2012
Kevin is correct, although pricing is off. Usually between $300-$700 per year depending upon valuables, etc...
0 votes
Donald Steve…, Agent, Fontana, CA
Wed Jun 20, 2012
The Association will cover the building and you have to buy a policy to cover the inside of the building. Sometimes you only need to cover betterments and improvements and sometimes you need to insure from the drywall and everything inside of that. Don't forget coverage for your personal belongings, liability if you are sued, and loss of use coverage to pay for you having to live somewhere else while they are repairing your condo.
0 votes
Kevin Ho, Agent, San Francisco, CA
Wed Jun 20, 2012
Yes, what you're looking for is a HO-6, walls-in policy. Most insurance agents or know what to do with this. Typically, that's going to be akin to renter's insurance policy averaging $100-$200 a month depending on how big your place is and what coverages you select. More important however is that your lender is likely to require it.
0 votes
Jim Olive, Agent, Key West, FL
Wed Jun 20, 2012
I believe you are correct. The condo insurance (assuming it is covered in your condo fee, something you'll need to ensure) will cover the building exterior, and your renter's insurance will cover your contents (that part should be optional, I've never heard of a lender MAKING you take renters insurance to protect your personal property, they generally don't care about your property, just theirs!). Discuss it with your loan officer. Best of luck...Jim
0 votes
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