Facebook Pixel

How Much Condo Insurance Should I Buy?

By Mike in Home Buying Tips with 0 Comments

During the second quarter of 2019, the San Diego real estate market showed signs of greater stability. While the number of available listings was still below buyers’ expectations, sellers became more motivated in terms of price negotiations. In downtown San Diego, sales of condominium units and lofts were brisk thanks to strong demand stimulated by more reasonable prices and steady mortgage interest rates. It’s a good time to go house hunting in the downtown districts, and if you’re wondering about insurance payments on your future condo in downtown San Diego, here’s what you need to know.

Affordability of Condo Insurance

When compared to the cost of homeowners insurance for single-family residences (SFRs), condo policies are lower, particularly in a housing market such as San Diego, where SFR properties tend to be priced significantly higher than the national average. Even if you purchase a penthouse in a luxury condominium tower, the combined costs of the master policy and coverage for the individual unit should be lower than those for SFR homes across many parts of San Diego.

The Coverage You’ll Need

If you’re financing the condo purchase with a mortgage, the bank will make insurance a closing condition. In most cases, this includes the master condo policy plus HO-6 coverage for the unit, a combination that offers reasonable protection in case of various losses but not necessarily for every situation. If you have valuable items or plan on renting your condo, you’ll need to inquire about extra coverage. When your loan-to-value (LTV) ratio is close to 50 percent and the master condo policy provides “all-in” coverage, the mortgage lender may only ask for minimal insurance that could be inadequate for your needs.

Average Condo Insurance Costs in San Diego

California property insurance rates tend to be between 2 and 3 percent higher than the national average. In the case of HO-6 coverage for condo units, buyers should expect to pay less than $500 per year, but this will vary according to the value of the property and the mortgage LTV ratio. As for master policies, keep in mind they’re bundled within the homeowners association fees, which also include maintenance of common areas as well as amenities such as swimming pools, fitness centers, and clubhouses. You can always ask the HOA to provide you with a breakdown of fees so you can see how much goes toward the master insurance policy.

The Bottom Line of Condo Insurance

Prospective condo buyers should strongly consider HO-6 coverage even when their master policies offer some protection in case of damage to the interior. Make sure to ask your insurance agent about the cost of policies that provide coverage for worst-case scenarios, such as a devastating earthquake, fire, theft, and flooding caused by faulty plumbing.

When you’re looking to buy a condo, downtown San Diego real estate can be one of your best choices. Many of the details involved in purchasing property, such as buying insurance, can be a bit overwhelming, so it’s a great idea to seek help from 92101 Urban Living, a trusted real estate firm with agents who will guide you every step of the way. To get into your dream downtown San Diego condo, call one of our friendly agents today at 619-649-0368.