Condo insurance rates vary based on several factors, but the average annual premium costs $572, according to the National Association of Insurance Commissioners. Find out how your coverage impacts your rate, as well as how to lower your cost with potential discounts.
Key Points
• Average annual condo insurance premiums cost $572, but policies covering $350,000 condos reach approximately $1,550 per year or $129 monthly.
• Location significantly impacts premiums based on exposure to natural disasters like floods, hurricanes, hail, and wildfires, with higher risks increasing costs.
• Deductible size affects premium costs, with smaller deductibles resulting in higher premiums since insurers pay more per claim, while higher deductibles lower premiums.
• Claims history and credit-based insurance scores influence rates, with multiple past claims or lower scores resulting in higher premium costs from insurers.
• Comprehensive condo association master policies reduce individual insurance costs, while safety features like sprinklers and bundling policies provide additional discounts.
How Much Does Condo Insurance Cost?
A condo is a privately owned unit within a community, but even though you may share amenities, you still have to carry your own condo insurance. The average cost is $572 per year, but there is a wide range of condominium insurance rates. We’ll cover those factors in just a moment, but first, let’s look at more data based on the amount of coverage.
Policies under $50,000 cost up to $475. But the average sales price of a condo today is $350,000. At that coverage level, NAIC estimates your premium will cost $1,550 per year. That comes to just over $129 per month.
Factors That Affect Condo Insurance Rates
What are the primary drivers of your condo insurance price? Just like the cost of any homeowners insurance, there are several categories that could impact how much you pay.
Location
The location of your condo matters because of how exposed you are to natural disasters and other risks. For instance, you’ll pay more if you’re more exposed to floods, hurricanes, hail, or wildfires. Insurers also look at how close your condo is to a fire hydrant or station, what the local crime rate is like, and how much construction costs in the area. All of these factors are considered by your insurance company when creating a quote for your premium.
Coverage Limits
As mentioned above, coverage limits have a major impact on your condo premium costs. While homeowner insurance covers the dwelling and exterior structures, condo insurance only covers the interior of the unit you own. The exterior should be covered by the condo owners association. A standard condo policy includes losses caused by perils such as fire, lightning, windstorms, smoke, vandalism, theft, and more — but only up to the limit in your policy.
But your premium cost depends on how much coverage you purchase. The higher the policy value, the more you’ll pay. You might also add on more coverage for extra liability insurance or valuables, which will result in a larger premium.
Deductibles
Before your insurer pays for a covered claim, you’ll need to cover the cost of your deductible. It’s a fixed amount you must pay for each claim before coverage kicks in.
The size of your deductible impacts how much you’ll pay for your overall premium. A smaller deductible will give you a more expensive policy premium, since the insurer will pay more for each claim. You can potentially get a lower premium by choosing a higher deductible, but you’ll be responsible for more of the repair costs every time you file a claim.
Claims History
Your condo insurance rate is also affected by your claims history. Insurers typically review a certain window of time and evaluate how many insurance claims you’ve made during that period. You may pay more if you’ve had multiple claims. But you could also get a lower rate if you haven’t had any claims during that timeframe.
The type of claim also matters. A major natural disaster that caused significant damage, for instance, is more likely to result in a premium increase than an accident like an overflowing toilet.
Credit-Based Insurance Scores
You probably cared about your credit score when applying for a mortgage, but you may be surprised to find out your score may impact your condo insurance premium as well. Insurers in most states usually perform a soft credit check when you initially apply for your policy and when it’s time to renew. The reason is that individuals with a lower credit-based insurance score are more likely to file a claim or file a claim that’s higher than the premium.
But this practice isn’t allowed in all areas. The following seven states have some type of restrictions around how insurers can use your credit score when making policy decisions.
• California
• Hawaii
• Maryland
• Massachusetts
• Michigan
• Oregon
• Utah
If you live in one of these states, find out how insurers can (or cannot) use your credit score as part of the application and renewal process.
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How Association Master Policies Affect Costs
Your condo owners association (COA) should have a master policy that outlines what shared spaces and building features are covered by the COA’s insurance policy. Typically, it includes property damage and general liability (in case of a lawsuit).
But because the COA owns the building structure and you own the unit itself, the source of a claim can be confusing. The better the COA coverage, the less expensive your condo insurance will be.
An all-in coverage master policy has the most coverage for the COA, including shared structures, the exterior of the building, fixtures in the units, and common areas. Studs-out coverage is less comprehensive and doesn’t cover anything within individual units.
Ways to Lower Condo Insurance Premiums
Like homeowners insurance, you may qualify for discounts to help lower how much you pay for condo insurance.
• Compare insurer discounts: You could save on your policy if your condo has certain safety features, like sprinklers or a security system.
• Bundle policies: Many insurers offer discounts if you carry more than one policy with them, such as bundling your condo and auto insurance.
• Pick a higher deductible: You’ll pay a lower premium if your deductible is higher, although you’ll pay more each time you file a claim.
• Skip low-value claims: If you have a covered event that doesn’t cost much more than your deductible, it may not be worth filing a claim since it could potentially increase your premium.
The Takeaway
Wondering how much condo insurance is? The bottom line is that your specific premium will vary based on multiple factors. The best way to ensure you get the right coverage at a fair price is to compare offers from multiple insurance companies. SoFi makes it easy to get several quotes with just one form.
If you’re a new homebuyer, SoFi Protect can help you look into your insurance options. SoFi and Lemonade offer homeowners insurance that requires no brokers and no paperwork. Secure the coverage that works best for you and your home.
SoFi brings you real rates, with no bait and switch.
FAQ
Is condo insurance cheaper than homeowners’ insurance?
Condo insurance is usually cheaper than homeowners insurance because your policy only includes the interior of your unit. The building’s structure is typically covered by your condo owner association’s policy.
How much condo insurance coverage do most lenders require?
Most lenders require enough condo insurance to cover the cost of repairing the unit to its condition before the claim.
Do condo insurance rates vary by floor level or unit location?
You may experience higher condo insurance rates if you live on the ground floor, since there’s a higher risk of flooding and break-ins.
Can installing security systems lower condo insurance premiums?
Yes, insurance companies may offer a discount if you have some type of security system installed, such as an alarm, window and door sensors, or motion detectors.
Can you bundle condo insurance with auto insurance for a discount?
Bundling your condo insurance and auto insurance is a good way to qualify for a discount. Check with multiple insurance companies to see how much savings you could receive.
Photo credit: iStock/ArLawKa AungTun
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