Condo Insurance vs. Home Insurance: Understanding the Difference to Protect Your Investment – Part I

In Puerto Vallarta and Riviera Nayarit, where property values have grown steadily in recent years, protecting real estate investments has become a strategic decision rather than a simple administrative requirement. Oceanfront condos, vertical developments, and properties destined for the vacation rental market coexist in an environment where risks—climatic, operational, and legal—demand a clear understanding of the scope of each insurance type.

To delve into this topic, the Vallarta Real Estate Guide editorial team spoke with Roberto Castellanos, managing partner of Novamar Insurance Mexico, who shared his insights on coverage, the differences between policies, and the best practices that owners, investors, and property managers should consider when making informed decisions for 2026 and beyond.

This first part addresses the fundamental differences between both types of insurance, as well as the impact of vacation rentals on coverage structures. In our second and final installment, we will dive deeper into the operational and preventive aspects that complete a comprehensive asset protection strategy.

CONDO INSURANCE: THE BUILDING’S COLLECTIVE PROTECTION

Condo insurance—known in Mexico as seguro de edificio and in the United States as HOA Insurance (Homeowners Association Insurance)—is designed to protect the elements belonging to all owners within a residential complex, whether vertical or horizontal. This is a master policy that safeguards the physical and operational integrity of the property.

“This policy covers the general structure of the building, hallways, lobbies, the pool and its associated machinery, gym equipment, and elevators, among other elements,” Castellanos explains. In practical terms, everything that does not belong exclusively to a private unit is part of this coverage.

One point that often causes confusion among owners is the case of windows and sliding doors. Although they are physically attached to each unit, they are part of the building’s façade and are therefore considered common areas. “Their maintenance directly impacts the building’s value,” Castellanos notes, emphasizing that any damage or deterioration to these elements affects the entire complex, not just a single unit.

Beyond basic coverage, condo insurance can—and should—be tailored to the specific characteristics of the property. Location, age, number of units, and type of use all influence how a policy is structured. This is where the concept of risk management comes in, which goes far beyond simply selecting an insured sum.

Updating the reconstruction value, maintaining inventories of machinery and equipment, identifying strategic suppliers, and evaluating contingency funds are tasks that must be performed periodically. “It’s about helping define values, inventories, and providers so that, in the event of a claim, the building can respond and/or begin functioning immediately,” Castellanos adds.

Roberto Castellanos, managing partner of Novamar Insurance Mexico.

HOME INSURANCE: INDIVIDUAL PROTECTION FOR EACH UNIT

In contrast to the building’s master policy, home insurance (or unit owner’s policy) protects what belongs exclusively to the owner. This includes interior finishes, personal contents, improvements made within the unit, furniture, and, in many cases, individual civil liability.

Castellanos clarifies that, for standalone homes, the land itself is not insured, as it remains even after a loss, unless there are underground structures. In the case of condos, home insurance serves as an indispensable complementary function.

This insurance covers everything that falls outside the building’s master policy: unit interiors, furniture, appliances, and third-party liability for damages originating from within the property. The key lies in understanding where collective responsibility ends and individual responsibility begins.

“It’s fundamental to understand what protection and scope each insurance has to know exactly what you own. This also helps define how your investment is protected,” Castellanos emphasizes. This clarity prevents coverage gaps and reduces neighbor conflicts when an incident affects more than one unit.

THE IMPACT OF VACATION RENTALS ON COVERAGE

The intensive use of properties for tourism has completely transformed the real estate insurance landscape in destinations like Puerto Vallarta and Riviera Nayarit. Vacation rentals increase the turnover of people and the use of amenities, consequently increasing the frequency of incidents.

This shift has impacted both condo master policies and individual home insurance, leading to the development of coverages designed specifically for this activity. Today, comprehensive policies exist that account for exclusive owner use, occasional rental, or continuous rental, without disproportionate penalties.

“With these types of policies, all forms of occupation are covered, so the owner doesn’t have to worry about the type of guest staying in their property,” he points out. Correcting declaring the actual use of the property is key to avoiding issues during the claims process.

Within this context, loss of rents has become an essential coverage. When damage prevents a property from being rented, the economic impact can be significant. For this coverage to be effective, it is vital to have documentation supporting the income.

“The insurer needs to see how you were renting, how much you were earning, and how much you would have earned if the building were in proper condition. Without documentation, that loss cannot be proven,” he warns.

In the second and final part of this special feature, we will address other key components of real estate insurance in the region: civil liability and the role of property managers, the most common risks in Puerto Vallarta and Riviera Nayarit, owner FAQs, conflict resolution, and preventive measures, as well as a series of practical tips for first-time buyers.