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5 Factors That Affect the Average Cost of Condo Insurance

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Simply put, no two condos are the same. You could be paying a different price for condo insurance than your next-door neighbor even though you live in the same building and same-sized unit.

This is because the technology that insurance companies use to determine rates has evolved to more accurately assess risk for the provider. Many factors affect the cost of condo insurance. Some you can control, like the aspects of the policy you choose. Other factors, unfortunately, you can’t control. 

This is why it’s important to always compare insurance providers. It’s your responsibility to choose the plan that gives you what you need at a price that works best for you.

5 Factors That Affect the Average Cost of Condo Insurance

The average cost of condo insurance is between $300 and $800 yearly. According to an insurance report from the NAIC from 2018, the most recent year available, the countrywide average cost of condo insurance across all coverage levels was about $500 per year.

These numbers aren’t that useful without context, though. A blanket number for the average cost of condo insurance isn’t easy to predict due to the plethora of variables that affect every policy. So, here’s a comprehensive list of some of the most important factors that influence the cost of condo insurance

1. Your Condo’s Master Policy

If your condo has a master policy, you’re probably aware of it. A master policy financially protects the structure of your building, the common areas and the amenities. Some condo or HOA master policies are more inclusive than others. 

If the master policy of your building is more inclusive, known as an “all-in” policy, you’ll require less condo coverage than an owner who lives in a complex with a “bare-walls” master policy.

In addition to the facades and common areas of the building, an all-in master policy will cover more of the stuff in your condo unit, which means you may need less condo coverage, which would reduce the cost of the condo insurance you’ll buy.

2. Location

Where your condo unit is in the country plays a huge role in determining how much your condo insurance costs. It’s more expensive in some states than others due to the possibility of weather-related disasters like hurricanes and tornadoes.

For example, it’s almost a guarantee that a condo owner in Florida or Texas would pay more for condo insurance than someone in Idaho or South Dakota with a similar unit. Insurers in states that receive serious weather charge more due to the increased likelihood of claims resulting from weather damage, resulting in higher average condo insurance rates.

Florida tends to be one of the most expensive states in the country for condo insurance, while states in the interior of the country are usually cheaper.

3. Age of Your Building and Unit

Units in older buildings may cost more to insure than units in newer buildings. New condos are more likely to be updated with the latest security measures and comply with the latest construction regulations, which providers prefer.

If a unit has dated plumbing, heating, or electrical systems, an insurer could believe that a problem is more likely to arise from one of these areas, so they raise your rate accordingly to account for that potential risk.

4. Claims History

If you have filed a lot of claims in the past, an insurance company will view you as a greater financial risk. They believe you’re more likely to file another. While some claims are viewed more seriously than others, the general rule of thumb is the more claims you file, the higher your insurance premium will be.

Additionally, if a previous owner of your condo unit filed several claims, this may negatively affect your premium. For example, if the last owner of 7C filed two or three water damage claims, there might be an issue with the plumbing in or around the unit. An insurance company could be aware of this and price your policy with this issue in mind.

5. The Coverage You Choose

Most of the condo insurance cost factors we’ve discussed so far don’t directly have to do with your actual condo insurance policy. Most have been uncontrollable or external. But, as you may expect, the characteristics you choose about your policy have a direct impact on how much it costs.

A. Amount of Coverage You Want

Condo coverage is mainly concerned with the contents of your apartment. Your personal belongings, like your furniture, TV, electronics, clothes and more constitute the focus of your coverage. You largely base how much condo insurance on how much of your stuff you want to protect.

Put simply, if you have less stuff, it will cost less to insure. If you have a lot of things, you’ll need to choose more coverage, and it will cost more to insure. Also, if you have any particularly high-value items, like certain pieces of art or expensive jewelry, you may need to purchase an additional endorsement to adequately protect them.

You also choose the amount of liability, loss assessment, loss of use and medical payments you want on your condo policy. If you want higher limits, the cost of your plan will reflect it.

B. Actual Cash Value vs Replacement Cost

If your personal belongings do get damaged by a covered peril, how you get reimbursed for them depends on whether you have chosen actual cash value or replacement cost coverage on your condo insurance.

Replacement cost coverage will pay you enough to replace the damaged item with an exact copy of what was there. You’ll be reimbursed what you paid for the item when you bought it. Actual cash value, on the other hand, factors in depreciation. So, if an item is older, you’ll be paid less for it.

As a result, actual cash value almost always pays you less for your items. It is also the cheaper of the two options.

C. Deductible

If you’re willing to pay more out of pocket when filing a claim, your insurance company will reward you with a lower rate. Generally, the higher your deductible, the lower your premium.

A fairly common deductible in condo insurance is $1,000, but you might be able to change it if you discuss it with your provider.

D. Available Discounts

Many insurance companies offer discounts to their policyholders. The types of discounts vary by insurer, though, so you should be sure you’re taking advantage of all that you can to save money on your policy.

Loyalty discounts, senior, veteran, no claims filed, new owner, student and bundling discounts are all potential rewards a provider may offer. Look into what you’re eligible for when deciding on a condo insurance policy.

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The editorial content on Clovered’s website is meant to be informational material and should not be considered legal advice.