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Average condo insurance rates

By Posted : November 02, 2017

How much does HO6 condo insurance cost? 

The average condo insurance cost nationwide is $389, for $60,000 in personal property coverage, with a $1,000 deductible, and $300,000 in liability protection – the limits of a typical policy. But that’s based on just one of the 75 coverage sets provided in the tool below. Your particular condo insurance cost will depend on your coverage limits and deductible, the value of your possession, among other factors. To get your customized average condo insurance cost, enter your ZIP code, personal property coverage, deductible and liability amounts in the tool below.

Getting started with condo insurance

If your heart is set on buying a condominium, know that your head might ache when you try to purchase insurance. Insuring a condo is often trickier than protecting a single-family home -- but don’t fret -- here we’ll explain the types of condo insurance and what they cover, and provide tips for how much condo insurance to buy. Plus, you can refer to Insurance.com’s condo insurance guide for more details.

"It can be quite confusing -- even to people in the industry," says Stuart Powell, a long-time insurance expert who teaches courses in insurance and risk management at the Walker College of Business at Appalachian State University in Boone, North Carolina. Despite the challenges, buying condo insurance can be simplified by using this check-list:

  • Check your master policy to see if it's all-in, bare walls or single entity.
  • Determine your liability coverage needed.
  • Calculate the value of your personal property and see if you need floaters to provide additional coverage for specific items.
  • Determine your dwelling coverage amount if master policy is not all-in.
  • Choose replacement value or actual cash value reimbursement.
  • Decide if you want flood, earthquake or sewer backup coverage.
  • Check your condo documents and add extra master policy deductible and special assessment coverage if needed.
  • Make a list of coverage you need and shop among competing providers.  Remember to ask about discounts.

 

Breaking down what condo insurance covers

On the surface, condo insurance and traditional single-family homeowners insurance appear to be similar. As with traditional homeowners insurance, a condominium policy covers three main things.

  • Dwelling coverage. This protects the building itself, including structures.
  • Personal property coverage. This covers your possessions, including furniture, clothing, electronics and jewelry.
  • Personal liability coverage. This protects you if someone is hurt on your property, or if you damage someone else's property or injure them away from your home.

However, it's important to understand the key differences between a homeowners policy and condominium insurance.

3 types of condominium insurance coverages

For starters, you probably won't need as much dwelling coverage as you would if you were buying a single-family home. Your condo association's master insurance policy likely will cover the exterior of your condo, as well as hallways, elevators, pools and other common elements.

In fact, figuring out just exactly what you need to insure – and how much condo insurance you need to buy – are the biggest challenges when buying condo insurance. 

There are three major types of arrangements that might apply to your condominium:

  • Bare-walls agreement. Typically, this means individual unit owners are responsible for insuring their unit from the sheetrock or wall studs in. That means covering things like walls, sinks, cabinets, appliances, flooring and wallpaper. Owners also must insure any renovations and improvements they make.
  • Single entity. In this type of coverage, the condo association master insurance policy provides protection for nearly everything in the complex, including your unit and the fixtures inside it. Condo owners are only responsible for insuring their personal possessions. However, any upgrades that you make to your unit are not covered in the event of a loss.
  • All-inclusive agreement. This is similar to a single entity plan, except that the condo association's master policy also covers any improvements, upgrades and additions you make in the unit. It is the most comprehensive form of coverage from the unit owner's perspective.

The condo association's rules and covenants dictate which of these arrangements applies in your condominium community. 

If you are subject to a bare-walls arrangement, you need to find the right documentation that explains what you are responsible for insuring. Powell says these documents should contain wording that "draws an imaginary line somewhere to separate the owner's unit from commonly held property," Powell says. 

The condo association's master policy will cover commonly held property, while you are responsible for insuring everything else. 

"Ask the condo association for a clear definition of where the unit line is," Powell says. "It they can't answer the question, you might have to go to an insurance agent. And if they can't answer, you might need to go to a lawyer."

Determining how much you have at risk

If your condo is subject to bare-walls rules, assigning a replacement value to the interior can be challenging, because the value of your individual condo is partially based on the common features – such as the building exterior, as well as a swimming pool and other amenities. 

The exact dollar amount of coverage you need also depends on other factors, such as:

  • Construction costs in your area
  • The type of materials used in your condo
  • The value of your personal possessions

If you're struggling to put a dollar figure on the amount of coverage you need, talk to your insurance agent. Powell says it is always better to buy too much coverage rather than not enough.

Deductibles

Rather than cutting corners on coverage, consider taking a larger deductible, which can lower your premium costs. The deductible is what you pay toward damages when you file a claim.

Deductibles apply to the personal property coverage portion of your policy. You typically have a range of deductible amounts from which to choose.

Actual cash value versus replacement value

One typical mistake condo owners make is buying coverage that reimburses the actual cash value of their belongings instead of a policy that covers the replacement costs. Actual cash value typically means your belongings are covered for their replacement cost minus depreciation. Depreciation is the decrease in an item’s value due to its age, condition or other factors. Replacement value means your belongings are covered for the amount it would take to replace them at the time of the claim.

Los assessment coverage

Powell's recommendation to avoid cutting corners on coverage extends to loss assessments coverage. This coverage reimburses you if the condo association charges a one-time special assessment fee to unit owners to cover costs that exceed the coverage limits of the association's master policy.

Loss assessment coverage is part of most condo policies, but typically provides just $1,000 in coverage. If this is the case with your policy, Powell urges you to purchase additional coverage. Special assessments sometimes can soar into the thousands of dollars. 

"Most people should buy $5,000 or $10,000 at a minimum," he says.

 

Don't skimp on liability coverage

Most people think of condo insurance as protecting their home and belongings. But condo policies also include liability coverage, which protects you if someone is injured inside your home.

Don't skimp on this coverage, because you'll be sorry you did if someone is hurt on your property, says Lori Conarton, spokesperson for the Insurance Alliance of Michigan.

"Many times it will be a minor injury," she says. "But other times, you may be sued, and liability insurance will provide coverage for you."

Typically, the minimum condo liability limit is $100,000, but that doesn't offer much protection should you end up on the wrong end of a lawsuit. Liability coverage can go as high as $500,000 – and in extreme cases, even that might not be enough.

Fortunately, there is an easy way to get even more protection. "Condo owners can also purchase an umbrella insurance policy that provides additional protection of $1 million or more for both their condo insurance and their auto insurance," Conarton says.

Buying a "bare bones" policy or even something with middling coverage to save money in the short term can be a risky move over the long haul.

"Lawsuits can be very expensive," Conarton says. She says the average judgment in slip-and-fall cases is $100,000, and the average cost to defend a liability lawsuit is $50,000. 

If somebody is severely injured or even killed, judgments could go much higher.

"Without liability insurance, the results of a lawsuit could be devastating financially to you," Conarton says.