How Much Is Condo Insurance?

Even though you may own just one unit in a condo building, you’ll need condo insurance. Also called an HO-6 policy, the cost is typically less than what you might pay for standard homeowners insurance.

However, you’ll need to carry coverage for as long as you live there, especially if you have a mortgage on the property—the lender will require it.

So, how much is condo insurance? Here’s what you can expect.

Average Cost of Condo Insurance by State

Nationwide, the average premium for HO-6 insurance for condos is $506, according to the National Association of Insurance Commissioners.

Utah has the cheapest condo insurance, with an average condo insurance premium of $269 per year, and the most expensive is Florida, at $964.

Why Are Condo Rates So Low in Some States?

Some states have cheap condo insurance premiums. The difference in cost is due in part to the risks in the area.

For example, Florida is prone to many more environmental dangers, such as hurricanes, than many other states, so premiums there are much higher than the national average.

Utah has the lowest average cost at $269. Many other states have premiums below the national average, such as Wisconsin ($280), West Virginia ($313), and Ohio ($319).

The insurance company ‘s risk paying out on a claim in those areas is much lower than areas like Florida, New York, and Mississippi—all of which have higher premiums.

The Role of the Master Policy in Condo Insurance Rates

A master insurance policy, or HOA master policy, covers property damage to the building and common areas (hallways, recreation rooms, sidewalks, and elevators).

It’s managed by the condo association or homeowners association and typically is one of three types:

• Bare walls coverage: As the name suggests, this is bare-bones coverage. It covers only the building property, structure, and common areas. Your condo unit, including your floors and walls, is your responsibility to insure, which can increase your condo insurance premiums.

• Single entity coverage: This is a step up from bare walls coverage. It protects the structure, including the floors and walls.

• All-in coverage: This is the most comprehensive protection. It includes everything you find in bare walls and single entity coverage, plus the original fixtures, installations, and appliances inside your unit. All-in coverage would leave you needing the least amount of individual insurance.

Since a master insurance policy can include some coverage of the condo owner ‘s interior unit, the master policy significantly impacts how much you pay.

How Much Condo Insurance Coverage Do You Need?

How much condo insurance coverage you need depends on the condo association’s master policy and your personal preference.

For example, if your master policy only covers bare walls, you’ll need the most amount of coverage from your individual policy to make sure you’re protected.

If your master policy covers more than the bare walls, you can usually lower the dwelling amount and focus on other coverages, such as your personal belongings or personal liability protection.

Personal Property Coverage

When it comes to personal property coverage, you can control how much coverage you buy for your belongings.

To know how much coverage you need, think of everything you own inside the condo and what it would cost to replace if you lost everything in a fire or another disaster.

Keep in mind that some policies have coverage limits on personal property claims. More expensive items, like jewelry or fine art, may require additional coverage. Your insurer may offer to increase the coverage amount as an endorsement or rider.

Liability Coverage

Even though you live in a condo, you could be responsible if someone were to get hurt on your property.

Your master policy might cover the incident if the injury occurred in a common area. Still, you could be on the hook for medical bills, medical payments, and legal fees if the accident or injury happened in your unit.

If you have a large amount of assets, consider how to best protect yourself. Most policies go up to $500,000 in coverage. So, if your assets exceed that amount, you may want to get an umbrella policy to increase your liability coverage.

Loss of Use Coverage

Loss of use can pay for additional living expenses if your condo is uninhabitable after a covered loss.

For example, if you can’t live in your condo after a fire ravaged the building, loss of use can pay for you to live somewhere else while your condo is being fixed. It can also cover the cost of food and other living expenses you incur while displaced.

What Factors Determine the Cost of Condo Insurance?

In addition to the master policy, other factors can influence the cost of your condo insurance policy:

• Condo location: If there is a high risk of natural disasters, such as a hurricane or other environmental damage, the premiums can be higher than if you lived in an area with very low environmental risks.

• Condo age: The older the building, the more likely that it will have outdated electrical wiring, plumbing, and other household systems. Newer buildings generally have more up-to-date technology and structures, reducing the chance of an insurance claim.

• Amount of coverage: If you finance your condo, your mortgage lender can require you to have a specific level of coverage. At the very least, you’ll want enough coverage to pay to repair or rebuild your unit if a hazard destroys it.

• Credit history: Some insurance companies use your credit score when determining rates. If you have bad credit, your premiums could be higher because the insurer sees you as a higher risk.

• Deductible: Lower deductibles generally increase policy costs. So the higher the deductible you take, the lower your premiums can be. Make sure to choose a deductible you can afford—if you had to file a claim and couldn’t pay the deductible, you’d be in a worse situation.

• Discounts: You may be eligible for discounts on your condo insurance. For example, if you bundle your insurance with other policies, such as car insurance, you may get a bundled discount. You can also get discounts if you don’t have any claims or for being loyal to a specific insurance company for many years.

Frequently Asked Questions

Are You Paying Too Much for Condo Insurance?

Your condominium insurance rates can vary from one condo insurance company to the next. If you’re in the market for a new condo or it’s been at least a year since you bought your last policy, you could be paying too much.

Shop around to find the best condo insurance quotes —and make sure you understand what the master policy covers so you get the protection you need.