What Is Condo Insurance, and How Much Does It Cost?
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As a condo owner, you might think that your homeowners association (HOA) insurance safeguards you from expenses incurred from incidents like fire, lightning strikes, theft, or vandalism. Unfortunately, that’s not how it works. Your condo association’s master policy covers damage to common areas and the building’s exterior, but you have to buy a separate condo insurance or HO6 policy.
Condo insurance is similar to home insurance in many ways, but it can differ in terms of coverage and cost. To help you better understand condo insurance, the This Old House Team rounded up everything you need to know. Read on to learn more about condo insurance rates, coverage, and more.
What Is Condo Insurance?
Condo insurance supplements your condo association’s master policy. Master policies typically protect the building’s exterior structure and common areas like hallways and pools. The master policy is funded by HOA or condo association fees. There are three main types of master policies:
It is critical to know what’s covered in your condo association’s master insurance policy because it directly influences the amount of coverage you need.
What Does Condo Insurance Cover?
Your condo insurance policy covers a variety of circumstances like the cost of repairs caused by certain perils, liability costs if you are sued for medical issues or property damage by a guest, replacement for damaged or stolen personal property, and temporarily living costs if your unit is uninhabitable. You can find a breakdown of the coverage condo insurance typically provides below.
Dwelling/building property coverage
Depending on your condo association’s master policy, you might need insurance for your unit’s interior, known as dwelling coverage. If the master policy provides all-in coverage, you won’t need dwelling coverage.
If the master policy comes with single entity coverage, it will only cover your original appliances and fixtures. If you have made additions or improvements, you might want to purchase dwelling coverage for your policy.
Bare walls coverage from your master policy means that items inside of your unit like fixtures, cabinetry, tiling, appliances, and carpets are not covered, so you’ll need dwelling coverage for them.
Personal property coverage
Your condo insurance will cover the cost of replacing belongings like furniture, electronics, appliances, and clothing if they are stolen or damaged by a covered peril. Valuable items like jewelry, musical instruments, and artwork have limits placed on them, but additional coverage is available.
Personal property coverage comes in two forms:
- Actual cash value: This is the most affordable option. Your condo insurance provider will pay you the equivalent of the current value of your items, which includes depreciation.
- Replacement cost coverage: With this comprehensive coverage, your insurer will provide you with a check that covers the original value of the items, not factoring in depreciation.
Not all disasters or perils are covered by condo insurance. Here are the perils you can expect most policies to cover:
- Lightning
- Wind
- Hail
- Fire
- Snow
- Sleet
- Theft
- Vandalism
- Riot
- Explosion
- Smoke
- Aircraft
- Vehicles
- Burst pipes
Personal liability and medical payments coverage
This coverage protects you from medical expenses and legal fees if you’re sued after a guest is injured on your property. This coverage also applies to the costs associated with a guest suffering personal property damage.
Additional living expenses/loss of use coverage
This kind of protection covers the costs you incur from living outside of your temporarily unavailable condo unit due to a covered peril. This protection covers things like accommodations, hotels, transportation, and dining.
Loss assessment
This type of coverage is not always included. It’s used when the cost of repairing or rebuilding your building exceeds the limits of your condo association’s master policy. When this happens, individual condo unit owners must contribute. Your loss assessment coverage may partially or completely cover the sum.
Vacant condo insurance
If your condo is vacant for a long period, in general at least 30 consecutive days, your policy might not cover claims for issues that occur during that period because they are considered higher risk. Consider purchasing vacant condo insurance if you plan to leave your condo for more than a month.
How Much Condo Insurance Do You Need?
Condo insurance is not required by the state, but often your mortgage lender or condo association will require it to protect their financial interests. How much you decide to get is a personal choice, but here are some general guidelines.
First, go over your condo association’s master policy to see how much dwelling coverage is included. The more that is covered by the master policy, the less you will need. To determine the amount you want, think about how much it would cost to rebuild your condo if it was damaged. Consider its original layout, and factor in the value of any additions or changes you have made to your condo.
In general, the limit for personal property coverage is 50% of the dwelling coverage. If you have a lot of valuable items like jewelry, consider purchasing additional coverage.
Condo insurance usually provides $100,000 in liability coverage. Typically, you have the option to increase this to up to $500,000. If you are sued, your investments, savings, vehicles, and other assets are at risk. Consider purchasing enough liability protection to cover the cost of all your assets. If this amount exceeds $500,0000, consider purchasing an umbrella policy.
Loss-of-use condo insurance coverage is generally about 20% of dwelling coverage.
How Much Does Condo Insurance Cost?
The amount you pay for condo insurance will depend on a variety of factors, including where you live, the age of your condo, the insurance company you choose, the deductible you select, and more. The average cost of condo insurance is $488 per year, according to 2017 data collected by the National Association of Insurance Commissioners. Here is a breakdown of the yearly cost average by state based on their data.
| State | Yearly Cost |
|---|---|
|
Alabama |
$540 |
|
Alaska |
$374 |
|
Arizona |
$389 |
|
Arkansas |
$518 |
|
California |
$501 |
|
Colorado |
$381 |
|
Connecticut |
$392 |
|
Delaware |
$406 |
|
Florida |
$942 |
|
Georgia |
$473 |
|
Hawaii |
$293 |
|
Idaho |
$405 |
|
Illinois |
$382 |
|
Indiana |
$345 |
|
Iowa |
$279 |
|
Kansas |
$413 |
|
Kentucky |
$381 |
|
Louisiana |
$736 |
|
Maine |
$330 |
|
Maryland |
$308 |
|
Massachusetts |
$441 |
|
Michigan |
$353 |
|
Minnesota |
$299 |
|
Mississippi |
$570 |
|
Missouri |
$377 |
|
Montana |
$373 |
|
Nebraska |
$332 |
|
Nevada |
$409 |
|
New Hampshire |
$316 |
|
New Jersey |
$437 |
|
New Mexico |
$381 |
|
New York |
$540 |
|
North Carolina |
$428 |
|
North Dakota |
$287 |
|
Ohio |
$315 |
|
Oklahoma |
$604 |
|
Oregon |
$345 |
|
Pennsylvania |
$377 |
|
Rhode Island |
$465 |
|
South Carolina |
$483 |
|
South Dakota |
$288 |
|
Tennessee |
$457 |
|
Texas |
$771 |
|
Utah |
$253 |
|
Vermont |
$339 |
|
Virginia |
$338 |
|
Washington |
$360 |
|
West Virginia |
$305 |
|
Wisconsin |
$249 |
|
Wyoming |
$361 |
For the most accurate pricing, we recommend getting quotes from multiple companies in your area:
The most expensive states for condo insurance
The states where condo insurance is the most expensive are high-risk areas, prone to weather events like hurricanes and tornadoes. The top five most expensive states for condo insurance are:
- Florida
- Louisiana
- Texas
- Oklahoma
- Mississippi
The cheapest states for condo insurance
States that have more affordable condo insurance tend to be less densely-populated and have a lower risk for extreme weather. They include:
- Wisconsin
- Utah
- Iowa
- North Dakota
- South Dakota
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