How Much Does Condo Insurance Cost?
Condo insurance is a form of homeowners insurance that covers individual units and their contents. Annual rates can range from $267 to $949, but the average condo insurance cost is $539 per year.
- Typical Range: $267 to $949
- National Average: $539
Securing homeowners insurance is one of the most important steps to buying a new home, as it protects against potential damages that could be very expensive to fix. Condo owners may believe that their unit is covered under their homeowners association (HOA) or condo association’s insurance, but that policy typically does not extend to individual condos or their contents.
Although some HOAs may carry insurance covering the entire building—including all units—condo owners will likely need to purchase separate insurance to protect their personal property. Condo insurance—also known as HO6 insurance—is a form of homeowners insurance tailored to the unique needs of a condo building and its residents. HO6 insurance includes dwelling coverage—insuring the ceilings, walls, and floors of a condo—as well as personal property coverage to insure the owner’s personal belongings. This type of insurance often includes liability coverage as well to cover damages caused by condo owners or their pets.
Condo insurance typically protects against the same types of perils that standard homeowners insurance would cover: fire, smoke, theft, fallen branches, and certain types of water damage, to name a few. Many weather-related perils are also covered by HO6 insurance. For instance, a condo insurance provider may pay to repair or replace windows damaged by hail or high winds.
HO6 insurance can be a worthwhile investment for condo owners even when not required by their condo association or mortgage lender. Without this coverage, condo owners could wind up paying for costly repairs or replacing damaged personal property or stolen possessions entirely out of pocket. How much does condo insurance cost? The average condo insurance cost for condo owners is $539 per year, but annual rates may range from around $267 to $949.
Factors in Calculating Condo Insurance Cost
Insurance premiums can vary depending on factors such as coverage limits, deductibles, and add-on policies. The location of the building is an important consideration too, as condo insurance rates often vary—sometimes significantly so—from state to state. Every person’s situation is different, and it’s good to know how each person’s specific circumstances can impact their condo insurance rate.
State of Residence
Condo insurance costs tend to vary depending on where the residence is located. Condo owners will likely find that insurance rates are significantly higher in some states compared with others. In general, condo owners should expect to pay higher premiums in states that face a greater likelihood of experiencing natural disasters, such as tornadoes or hurricanes. The heightened risk of catastrophe—and ensuing expensive repair work—can mean that condo owners will pay more to insure their property and possessions in some locations compared with others.
Deductible and Coverage Amounts
As with homeowners insurance, condo insurance costs can be highly dependent on the terms of the policy itself. Prices generally go up as policyholders expand coverage and raise their limits. Deductibles play an important role in determining HO6 insurance cost as well. Selecting a lower deductible will often result in a higher premium since the insurance provider would take on a larger share of replacement or repair costs. The opposite is true, too: Higher deductibles often lead to lower monthly premiums for policyholders.
Insurance costs increase as customers amend their policies, add new terms, and expand coverage. Policyholders who add an endorsement for earthquake insurance, for instance, will likely see their premiums go up to pay for that extra coverage. Certain types of coverage such as liability insurance and loss of use may be baked into a standard condo insurance policy, but that’s not always the case. Condo owners who want to increase their liability coverage could request higher policy limits, which would result in higher monthly premiums. Every change made to a standard condo insurance policy may drive up the cost of coverage.
Insurance providers frequently offer discounts that help customers lower their overall cost of coverage. Some of the most common discounts include bundles in which policyholders package multiple types of insurance—home and auto, for example—together at a lower rate. Insurance companies may also use discounts to entice policyholders to switch providers or simply reward a new customer for signing up for a policy. Taking advantage of such discounts can lower condo owners’ monthly insurance premiums and the total amount they spend on condo insurance.
Building Age and Condition
Anyone who has moved from a newer home into an older one could probably confirm that their homeowners insurance premiums went up after the sale went through. Older properties cost more to maintain and repair, which can lead to higher insurance costs. That same principle holds true with condo units as well. An older building may have outdated wiring or plumbing that’s at a greater risk of failure, and an insurance company may charge a higher rate to account for that risk. Conversely, newer builds or renovated units could be covered at a lower condo insurance rate.
Credit Score and Credit History
Insurance companies try to assess risk from as many vantage points as possible—and that includes the policyholders themselves. Credit scores reflect a person’s ability to manage debt and stay on top of financial obligations—such as consistently paying insurance premiums. A lower credit score could indicate to insurance companies that the policyholder is less likely to keep up with the premiums each month, and so they may increase rates as a result. On the other hand, prospective customers may be offered lower condo insurance rates if they have a strong credit score.
Every reported claim costs insurance companies money, even those that are rejected. As such, providers could view customers who have a track record of filing insurance claims as more expensive to insure than policyholders who have rarely—or never—filed a claim. With that in mind, it should come as no surprise that customers who make fewer claims can receive a lower condo insurance rate.
When it comes to condo insurance, in particular, providers may look at the claims history attached to the property itself to get a better sense of the condition of the unit and the likelihood that a claim will be made. Multiple claims for the same type of peril, such as fire damage or theft, could indicate that property owners have failed to take necessary precautions to prevent these incidents. Under those circumstances, insurance providers may have reason to believe such events are more likely to happen again, which can lead to higher insurance premiums for the condo owner.
Local Crime Rates
City dwellers may find that their condo insurance rates are higher than those of people living in the suburbs or rural areas. Although there are many factors that inform the cost of condo insurance, crime rates are an important one to consider. Frequent reports of break-ins and burglaries in the area could increase the risk of theft or property damage in the eyes of an insurance company. If providers believe policyholders living in certain areas are more likely to file claims on stolen property or broken windows, they may charge higher condo insurance rates to those customers.
Proximity to Nearest Fire Station
Fire damage is one of the most expensive perils that an insurance company could be required to pay to repair. Insurance providers will often ask if there are safety devices like smoke detectors on the premises to gauge how risky a unit would be to insure against this peril. They may even check how close the property is to the nearest fire station to see how quickly firefighters may respond to an emergency. If there’s reason to believe that firefighters could put out a fire without delay and minimize the amount of damage to the building or unit, then insurance companies could reduce the rate for coverage.
Dog Ownership and Dog Breed
Condo insurance includes liability coverage that helps pay for legal fees, medical bills, and other damages that the policyholder is responsible for paying. This coverage often extends to the policyholder’s pets, too. Liability coverage can come into play if a policyholder’s dog bites a neighbor or another person’s pet. In that scenario, liability insurance may pay for any medical bills or legal fees incurred by the policyholder. Insurance companies often flag certain breeds that are more likely to cause harm because of their size or temperament. Dog owners can expect to pay more for condo insurance in general, but those who own riskier breeds such as pit bulls or rottweilers may face even higher condo insurance rates, and in some cases, will have any claims involving a dog that’s considered a more dangerous breed denied altogether.
Home Security Features
In addition to safety devices like smoke detectors, the presence of home security features such as security systems and cameras can help reduce policyholders’ condo home insurance cost. Installing home security devices in a highly visible area could minimize the impact of a break-in—if not dissuade would-be burglars altogether. An insurance provider may view a condo unit with these features as less risky, offering coverage at a lower rate as a result.
Additional Costs and Considerations
While many condo insurance cost factors will affect most home buyers, there are some additional considerations that may only come into play in certain situations. These scenarios often involve policy add-ons that increase coverage options but also raise the price of insurance. Because there’s so much variability here, there isn’t a one-size-fits-all answer to the question “How much is condo insurance going to cost me?” If homeowners select some or all of these extra terms, they could see rates on the higher end of the condo insurance cost range.
Extra Personal Property Coverage
Condo insurance includes policy limits, which determine the maximum amount an insurance company might pay on a claim for damaged or stolen property. Condo owners can usually choose to purchase extra personal property coverage to insure valuables for more than the standard coverage limit. Doing so will likely increase the cost of insurance, but it may be worth the expense to enjoy more peace of mind.
Water Damage and Backup Coverage
Water damage can be a gray area when it comes to homeowners, condo, or renters insurance. Knowing when this peril is covered depends largely on the source of the damage. For instance, condo insurance would likely pay to repair a burst pipe or a dishwasher that suddenly malfunctions and leaks all over the floor, as well as any resulting damage to the unit. Coverage for water damage stemming from a backed-up sewer line, however, would require a separate endorsement. Flooding is another water-based peril that likely wouldn’t be covered by a standard condo insurance policy. Condo owners who live on the first floor or in a garden unit will want to consider obtaining a separate flood insurance policy to protect against flooding.
Some types of water damage may be covered by the homeowners association’s insurance if the source is part of the exterior structure of the building or located in a common area. For instance, the association’s insurance provider may pay out a claim if the building has a leaky roof and causes water damage to a top-floor unit.
Identity Theft Protection
Although identity theft protection is rarely included in a standard condo insurance policy, it may be available as an add-on endorsement. This kind of coverage can help pay for legal bills, lost income, and other expenses or financial losses resulting from identity fraud. Policyholders may enjoy the extra sense of security that comes with identity theft protection, but adding that protection will likely come at a higher condo insurance rate.
Condo insurance companies may charge higher premiums to policyholders who are away from their primary residence throughout the year—for instance, a salesperson who spends a lot of time on the road. With the home left unoccupied for extended periods of time, there could be a greater risk of burglary and theft. In addition, insurance providers may be concerned that there will be no one home to respond to fires, leaks, and other costly covered perils. This consideration does not apply to vacation properties, second homes, or rental properties, all of which require separate policies to insure.
Types of Condo Insurance
Although HO6 insurance is the only form of homeowners insurance available to condo owners, it’s important to also consider the type of insurance that a condo building may carry. The homeowners association’s policy may determine how much coverage is needed in an HO6 policy to adequately protect the entire unit and its contents, which will impact condo insurance cost. Condo owners may even find that they don’t need much extra coverage beyond protection for their personal property and liability because the association’s policy is so extensive.
Bare Walls Coverage
Bare walls coverage is the most limited coverage that a condo association can possess. This coverage primarily insures the structure of the building as well as common areas accessible to all residents. Individual units—including ceilings, walls, and floors—are not included in bare walls coverage. If a condo building has bare walls coverage, then each association member will need to purchase separate condo insurance to protect their unit and belongings.
Single Entity Coverage
Single entity coverage extends to the structural components of each unit in the building, including the walls, ceilings, and floors. It may also insure original appliances and fixtures—refrigerators, bathtubs, washing machines, etc.—installed in the unit. There are limitations to this coverage, though. Most notably, replacement fixtures are not covered by single entity policies. If a condo owner installed a steam shower, for instance, the building’s single entity coverage would not insure it. Personal property is also excluded from this type of coverage. Although condo owners would have some amount of dwelling coverage, they would likely need to purchase a separate personal property policy to insure all their possessions.
All-in coverage is the most extensive insurance policy that a condo building can carry. As the name suggests, all-in coverage insures the entire property, including private units, as well as all fixtures and appliances regardless of their status. Even so, all-in coverage typically does not extend to personal possessions, so condo owners would still need to get their own policies to protect their valuables in the event they are damaged, lost, or stolen.
Do I Need Condo Insurance?
Generally speaking, it’s a good idea to obtain HO6 insurance if you live in a condo building. Although there may be some cases where the condo association’s insurance covers individual units as well as the building itself, many HOAs will opt for a less expensive policy with more limited coverage. At minimum, condo owners will likely need to purchase a separate policy to insure their belongings, but they may also want to buy additional endorsements to increase their coverage. Condo buyers may also be required by their mortgage company or condo association to obtain a certain amount of coverage.
Mortgage Lender Requirements
When financing a home purchase, whether it’s a single-family house or a condominium, home buyers are usually required to obtain some form of homeowners insurance. Mortgage lenders make this stipulation as a way to protect themselves in the event that the home is destroyed or damaged beyond repair and needs to be rebuilt. As such, lenders may insist that condo owners buy enough insurance to cover the cost of completely rebuilding the entire unit and restoring it to its original condition.
Homeowners Association Requirements
Homeowners associations may have their own set of requirements involving condo insurance. An HOA will carry insurance to cover the building’s exterior and common areas, but that insurance may not extend to the actual units. As part of their HOA agreement, condo owners may be required to purchase condo insurance even if they have paid for their unit in full without any kind of financing. Depending on the location of the building, the condo association may require condo owners to purchase additional endorsements such as earthquake or flood insurance to protect against perils not typically included in a homeowners policy. In some cases, an HOA board may vote to increase limit requirements, forcing residents to increase their existing coverage.
Benefits of Getting Condo Insurance
Although condo insurance may not be legally mandated, it’s usually a good idea for condo owners to protect their homes and valuables—not to mention their finances—with this type of insurance. Beyond the standard coverage that condo insurance offers, condo owners may find that there are plenty of add-ons, endorsements, and policy options that further extend the benefits of carrying condo insurance.
Extra Coverage for Personal Valuables
Even if their homeowners association carries all-in coverage, condo owners will likely need a separate policy to insure their personal belongings. Policyholders also may have the option to purchase extra coverage for possessions whose value exceeds current coverage limits. In many cases, condo insurance providers allow customers to tailor their policy to their needs, getting as much coverage necessary to fully insure their own unit and its contents.
Personal Liability Protection
Many home buyers focus on dwelling coverage and personal property protection when shopping around for homeowners or condo insurance, but personal liability protection can be just as valuable. Personal liability policies help cover the costs of damages caused by the policyholder, which may include repair expenses, medical bills, and legal fees. Personal liability coverage is a typical component of condo insurance policies, so home buyers may not need to purchase a separate policy to enjoy the sense of security this type of coverage can offer.
Additional Living Expenses Coverage
Condo insurance typically covers perils like fire or some types of water damage that can significantly damage the unit and require extensive repairs. Condo owners may need to vacate the unit while that repair work is being completed, and staying at a hotel for several days or weeks can be difficult to budget around. Loss of use coverage can cover those costs if policyholders are unable to reside in their unit for any amount of time. Having this kind of coverage can further insulate condo owners from unexpected expenses resulting from property damage.
Additional Coverage for Building Damage
Although condo associations carry insurance of their own, they may still assess damages to condo owners after a covered event impacting the building’s structure. This can happen if the cost to make building repairs exceeds the coverage limits contained within the association’s policy. With a standard condo insurance policy, homeowners may pay these costs out of pocket. However, a loss assessment endorsement can help cover such expenses so policyholders aren’t required to pay any additional money on building repairs.
Medical Payments Coverage
Medical payments coverage included with condo insurance can cover medical bills if a guest or visitor is injured inside a policyholder’s unit. Condo owners can also raise their coverage limits to help pay for a greater share of the treatment costs for injured visitors. Expanding medical payments coverage in this fashion is completely optional, but it could provide some added peace of mind for condo owners.
How to Save Money on Condo Insurance
Certain factors that influence condo homeowners insurance cost cannot be controlled by homeowners—location, building age, and crime rates, for example. However, there are several steps condo owners can take to lower condo insurance rates in other ways, ranging from simple adjustments to their policies to making extensive changes to the unit itself.
- Get quotes from multiple insurance providers and shop around for a lower rate.
- Tweak policy terms to reduce monthly or annual premiums. Taking on a higher deductible will often lead to a lower condo insurance rate.
- Take advantage of any available discounts to get a lower rate on condo insurance. Providers may offer discounts to new customers or existing policyholders who bundle two or more policies together.
- Consider renovating an outdated unit to bring it in line with modern standards, which could lead to a lower insurance rate.
Questions to Ask About Condo Insurance
When shopping for condo insurance, cost is often the primary concern for home buyers, but there are a lot of other aspects to consider. It can be difficult to know what questions to ask to accurately compare the best homeowners insurance providers and find the right terms and coverage to meet your needs. Asking the following questions can help condo owners better assess which condo insurance company is the right fit for them.
- What are the coverage limits on my policy?
- Are there any discounts I can use to lower my condo insurance rate?
- What deductibles options are available, and how will they affect the cost of condo insurance?
- Can I add extra endorsements to my policy to cover more perils or increase coverage limits?
- Is my dog’s breed covered under the policy’s liability protection terms?
- Would adding security or safety features like security cameras or fire extinguishers reduce my condo insurance rate?
Buying condo insurance—or any type of insurance, for that matter—may seem daunting, but homeowners can make this process a lot easier by understanding some of the most important factors to consider. In particular, it’s a good idea to address a few of the most common questions people have about condo insurance cost and coverage.
Q. What determines the cost of condo insurance?
There are many factors that can influence the cost of condo insurance, including coverage limits, deductibles, and discounts. Risk factors relating to both the policyholder and the building can also affect a policyholder’s condo insurance rate. Those risk factors may include a condo owner’s credit and claims history, as well as the building’s location and age.
Q. How much is condo insurance on average?
Across the country, condo insurance average cost is $539 per year, but annual rates can run anywhere from $267 to $949.
Q. Why do condo insurance costs vary so much by state?
Some states may face greater risk of natural disasters like hurricanes and tornadoes, which can cause more extensive damage that requires expensive repairs. Policyholders may find that hurricane-affected areas such as Florida see higher condo insurance rates than places like Utah or South Dakota that may be less likely to experience natural disasters.
Q. What does condo insurance cover?
Condo insurance typically includes dwelling coverage to insure the walls, ceiling, and floors of the unit, as well as personal property coverage to protect the policyholder’s belongings and valuables. It typically includes personal liability coverage as well. Condo insurance often covers the same types of perils covered by a standard homeowners policy, such as fire, hail, and theft.
Q. What events are not covered by condo insurance?
Condo insurance generally does not cover perils related to natural disasters such as floods, earthquakes, and hurricanes. Homeowners may need to purchase separate policies or add endorsements to their existing condo insurance to cover these perils. Water damage can be excluded as a covered peril depending on its source. A burst pipe would be covered under many condo insurance policies, but a backed-up sewer line would most likely not be covered.
Q. What does HOA insurance cover?
Depending on the type of condo insurance carried by the homeowners association, HOA insurance may cover anything from the building’s core structure to the individual units. Bare walls coverage is a common policy used by condo associations, and it only insures the building structure along with common areas. The most extensive HOA policies, all-in coverage, will insure walls, ceilings, floors, and fixtures, but it won’t cover any personal possessions.
Q. What is the minimum coverage I need?
Minimum coverage needs can vary depending on the value of the policyholder’s possessions as well as the unit itself. If you financed the purchase of your condo with a home loan, then your lender will likely insist that you get enough condo insurance to cover the full cost of replacement for the entire unit. State regulations and condo association bylaws may stipulate that condo owners purchase a certain amount of coverage as well.
Q. Whose insurance covers water damage in my unit?
Coverage for water damage depends on its source. Damage stemming from burst pipes in the condo owner’s unit could be covered by their condo insurance, but typically only if the damage resulted from a sudden and accidental event. Flooding water would require a separate flood insurance policy to cover repair costs. Meanwhile, water damage caused by pipes or fixtures located in common areas may be covered by the HOA’s policy.
Q. Do condo insurance and homeowners insurance cover the same perils?
In many cases, condo insurance and homeowners insurance cover overlapping perils. Fire, hail, lightning, smoke, theft, and some instances of water damage are all typically covered by both homeowners and condo insurance.
Q. Will condo insurance cover damage stemming from other units?
If water damage can be traced back to a neighboring unit, then that condo owner’s insurance would likely pay to make the necessary repairs. Your own insurance probably won’t pay for any damages in that scenario because another party is liable.