Updated December 15, 2020|5 min read
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The cost of condo insurance can be a tricky thing to predict, as condos are covered by two types of insurance policies – your own condo insurance policy and your condo association’s policy, which is commonly known as the “master policy.”
How much condo insurance coverage you need depends on what’s covered in the master policy. Your personal condo insurance cost is often a reflection of how far-reaching or how limited your homeowners association (HOA) master policy is.
Whatever the cost may be, you’ll want to be sure your condo, your belongings, and your personal liability are suitably covered. You’ll also want to make sure you’re not paying too much for any components of condo insurance coverage that don’t need. A good place to start is getting a good grasp of the basics of condo insurance and what is and isn’t covered under a standard policy. Beyond that, condo insurance cost is primarily reliant on the state you live in, your credit history, how much coverage you need, your deductible amount, and if you have certain features that can qualify for discounts.
The average cost of condo insurance in the United States is $488, according to the NAIC
Condo insurance prices vary from state-to-state. If you live in an area that experiences frequent natural disasters or high crime rates, for example, your premiums will be higher
Your HOA master policy will also affect how much condo insurance you need
Condo insurance premium costs differ from state to state for a variety of reasons. If a state has a lot of major cities and more densely populated areas, it’s more likely to have higher premiums, as home and condominium values are generally higher.
States with a higher incidence of natural disasters also generally have higher premiums than northern landlocked states that don’t experience as many. The average annual condo insurance premium in the U.S. was $488, according to recently reported National Association of Insurance Commissioners (NAIC) data from 2017.
Here are the average annual condo insurance premiums in each state as of 2017, according to the NAIC.
|State||Average annual condo insurance premium||State||Average annual condo insurance premium|
A common trend in four of the most pricey states for condo insurance is that they all experience a great deal of extreme weather: hurricanes in Florida, Louisiana, and Mississippi and twisters in Texas and Oklahoma.
States that are less populated and aren’t as prone to bad weather and natural disasters often offer bargain deals on condo insurance premiums.
While we don’t advise moving somewhere based on how much condo insurance premiums run, it’s helpful to understand why policies are cheaper in certain areas than others. As you can see, states with the lowest average premiums are more sparsely populated and are typically inland, so they’re not as likely to experience tropical storms.
North Dakota: $287
South Dakota: $288
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Condo insurance companies factor in different kinds of potential risks when determining condo insurance rates. Some of these risks you have control over, and some you don’t.
Your HOA’s master policy
Your HOA master policy may be one of three different types of policies:
Bare walls coverage: The type of master policy with the least amount of coverage. Only includes coverage for the structures of your unit, like the flooring and drywall. Also covers the common areas of the condo. You’d need a more comprehensive condo insurance policy to fully protect your condo unit and your belongings.
Single entity coverage: The most common type of master policy. Includes the same coverage as bare walls, plus coverage for the makeup of your condo unit, like the built-in appliances and cabinetry.
All-in coverage: Most comprehensive master policy. Provides dwelling coverage, liability coverage, and loss-assessment coverage if someone gets injured at the condo pool or a common space is damaged. All you would be responsible for is personal property coverage, and you’d have the option of adding additional coverage like loss-of-use coverage and additions and alterations coverage if need be.
Not every master policy is created equal and may have conditions and stipulations for when it will cover a certain component, so the cost ultimately depends on how robust the master policy is.
Location is a key decider in how high or low your condo insurance premiums run. Weather, population density, proximity to regions with a high-risk for forest fires, proximity to fire stations, and insurance claim frequency in a specified area are all taken into account when determining rates.
Most states allow condo insurance companies to check an individual’s credit history to determine their premium. Your credit history is used as an indicator of how reliable you are.
The condo’s age and condition
If you bought an old condo whose previous owner didn’t take very good care of it and never got the leaky plumbing fixed, the insurance company will consider the condo’s claim probability to be higher than normal and won’t insure it for cheap. Modernizing the unit and making renovations to deter further damage and costs down the road is a good way to keep your insurance premiums low.
How much coverage you want
When buying a condo insurance policy, it’s often up to the condo owner to decide just how much coverage they want. There are instances where this isn’t the case, and the mortgage lender will require specific coverage amounts for certain components like dwelling and liability coverage. It also may be the case that your insurance company offers you a specified dwelling coverage limit (with say, an 8%-10% variance) and doesn’t allow for much wiggle room other than that.
Otherwise, your personal property coverage, liability coverage, additions and alterations coverage, loss-assessment coverage, medical payments coverage, and any floaters or additional coverage types are up to you, the policyholder.
A deductible is the amount you pay out of pocket in the event of a claim. Deductibles usually come in amounts of $500, $1,000, or $1,500. The general rule of thumb in insurance is lower deductible, higher premiums; higher deductible, lower premiums, but keep in mind that if you set a very high deductible, you may actually have to pay it someday in the event of covered loss.
Condo insurance discounts
Homeowners insurance companies offer numerous discounts and bundles that can lessen that monthly or annual premium. It’s common for home insurance and auto policies to be bundled together, and that bundle can mean big savings; loyalty discounts are also common if you’re with the same company for a set number of years; and lastly, try filing infrequent claims or no claims at all (for the small stuff at least) – you may be rewarded with a pretty good discount.
Condo dwelling coverage: We know that the extent of your dwelling coverage depends on your building’s master policy. If it's bare-walls, you’ll need to cover the structure of the condo interior yourself, including the floors, cabinets, carpets, lights, inner walls, built-in appliances, and pretty much everything that came with the condo when you moved in. Coverage for the interior of your condo should equal its full replacement cost, or what it’d cost for a full rebuild.
Condo personal property coverage: Personal property coverage should be enough to cover your clothing, appliances, furniture and electronics if they’re damaged, stolen, or destroyed by a covered peril. Condo insurance will replace any damaged or stolen items up to a certain limit. Certain types of property, like jewelry and expensive art, may not be covered by your personal property coverage and you may need to add an endorsement to your policy for extra coverage.
Condo liability coverage: Condo liability coverage should be enough to cover legal fees, but financial assets – like the condo itself, investments, and anything else with a dollar amount attached to it should be covered as well. If $500,000 in coverage isn’t enough (typically the maximum liability coverage amount in a condo insurance plan), you can add an umbrella policy to increase your liability coverage amount.
Loss-of-use coverage: Loss-of-use covers your relocation, housing, food and living expenses up to a certain limit, and is usually about 20% of your total dwelling coverage.
Condo additions and alterations: Should be enough to cover any renovations or improvements you made to the apartment. Additions and alterations coverage is usually only necessary if your HOA has a bare-walls or single entity master policy, as the dwelling coverage under an all-in policy would cover additions and alterations insofar as you update your policy’s coverage limits.
Loss-assessment coverage: Coverage for you and condo owners if the condo building’s common area or property is damaged or destroyed by a guest or condo resident, or if someone is injured in a common area of the building. Condo owners pay an equal amount to cover for the damage, and are reimbursed by their policy’s loss-assessment coverage. Most condo insurance companies put loss-assessment coverage at about $25,000.
Considering condo insurance but want it on the cheap? Let our licensed experts help you understand your building’s master policy and find the most affordable coverage options for you.
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