High-rise building insurance: Costs, coverage, and more

High-rise living brings a range of benefits, including impressive views, exclusive amenities, and enhanced security. With these advantages come important insurance needs that differ from those of low-rise buildings. High-rises often have multiple residences, each with their own policies, plus shared common spaces, which also require coverage.

"We find that high-rise association board and council members and residents alike can sometimes be unaware of the specific kinds of insurance coverage they need to stay protected. And in those cases, when a loss occurs and you are not covered properly, it can have a financial impact on the association and unit owners."

Andrew Lester, president of FirstService Financial

Choosing the right building insurance is about taking steps to protect your property and your investment. This article outlines key aspects of high-rise insurance, from types of coverage to what affects the cost, and helps board and council members approach insurance decisions with more knowledge and clarity.
 

What is high-rise building insurance?

High-rise building insurance refers to insurance policies tailored to address the complex risk profile of tall, multi-unit residential, commercial, and mixed-use buildings. Unlike standard property coverage, these policies address elevated risks, higher occupancy, and intricate systems that are common in high-rise environments. For condos or co-ops, insurance responsibilities typically fall to both the building association and individual residents.

Locating the right policy often takes focused experience. “Time and again, we see agents who do not have experience in the high-rise condominium world make big, and often potentially costly mistakes,” Lester said. Working with brokers who know the specifics of local regulations and the high-rise industry can help reduce costly gaps or overlaps in coverage.
 

What does high-rise insurance cover?

Insurance needs for high-rise communities are usually split between the association (or owner) and each homeowner or resident. There are distinct areas of accountability and understanding how the pieces fit together better positions communities and owners to avoid overlooked exposures.
 

Coverage for the building or association

Associations typically secure a “master policy” that addresses the structure and shared spaces. This umbrella of coverage generally includes:

• Property insurance: Protection for the building’s structure, such as the roof, exterior walls, foundation, and shared mechanical systems. This part of the policy addresses risks like fire, storm, and vandalism.
   
• Boiler and machinery coverage: Mechanical breakdown insurance for elevators, escalators, HVAC equipment, and boilers; systems essential to a high-rise’s operation but not covered in typical property policies.
   
• General liability insurance: Third-party injury and property damage claims that arise in common areas (lobbies, gyms, hallways, pools) are managed under this.
   
• Umbrella liability insurance: Provides an extra layer of liability coverage beyond the limits of primary policies. This is crucial for high-rises due to the high risk of catastrophic claims.
   
• Building ordinance and law coverage: When local codes change, repairing or replacing a damaged portion of a building can become more costly. This coverage supports compliance with updated building requirements.
   
• Directors & Officers (D&O) liability: D&O insurance protects board members and staff from claims related to governance, such as alleged bylaw violations, contract disputes, or decision-related litigation.
   
• Flood and earthquake insurance: Because standard property policies usually exclude these risks, specialty insurance may be necessary depending on the building’s geographic location.

Coverage for individual unit owners

While master policies cover the building exterior and common areas, owners of condos or co-ops are expected to purchase their own policies, typically an HO-6 (condo) policy, to fill remaining gaps:

• "Walls-in" coverage: Covers everything inside the four walls of the unit like fixtures, flooring, cabinetry, custom upgrades, and appliances.
   
• Personal property coverage: Reimbursement for personal items (furniture, clothing, electronics, decor) that were damaged or lost due to a covered event.
   
• Loss assessment coverage: If a significant loss exceeds master policy limits, the association might levy a special assessment on unit owners. This feature can offset the owner’s assessed portion.
   
• Personal liability: Protection from claims resulting from accidents or injury occurring inside the owner’s apartment.

Cost of building insurance

The cost of high-rise insurance is integral to a building's annual financial plan. Many variables impact what an association or owner will pay, and understanding these can support more informed budgeting and risk management decisions.

Several elements influence insurance pricing:

• Building age and construction: The older or less updated a building is, the higher the insurance premium may be due to increased frequency or severity of claims.
   
• Location: Risks related to natural disasters, such as hurricanes or earthquakes, as well as local crime rates, often drive rates higher in susceptible regions.
   
• Loss history: A pattern of recurring claims for issues like water intrusion can prompt steep premium hikes or higher deductibles.
   
• Occupancy type: Buildings with retail or commercial tenants typically face broader risks and higher insurance costs than strictly residential properties.
   
• Coverage limits and deductibles: Higher insurance limits and lower policy deductibles will raise premiums, while reduced coverage or larger deductibles can lower the bill, but at the expense of greater risk.

High-rise insurance requirements

Both building associations and residents are expected to meet insurance requirements set forth by governing documents and, often, lenders. While requirements vary, they almost always specify policy types and minimum limits.

Mortgage lenders often request proof of insurance before funding a loan. These requirements don’t just protect the lender; they benefit the long-term stability of the community and its owners as well.
 

The right policy isn’t always the cheapest

Board decisions on insurance should look beyond getting the lowest cost. John Lee, FirstService Financial’s South region vice president, points out, “It is certainly possible for any association to find a policy at an extremely low cost. But does the policy provide adequate coverage? Are there gaps that expose you to risk? Is the deductible onerous?” The true measure is whether a policy delivers the right mix of protection and value for the community’s needs.
 

Smart communication, better coverage

Proactive attention to risk control, maintenance, and open communication with carriers can help communities pursue more competitive rates. Susan Ward-Freeman, president of high-rise division in Texas, emphasizes the importance of communication.

"When an association has some open dialogue with their insurance company, and they provide clean documentation of building upgrades, safety systems that they've implemented, and mitigation efforts like water leak detection, they are increasingly viewed as lower risk insurers, leading to better terms, broader coverage, or lower premiums."

Susan Ward-Freeman, president of high-rise division in Texas

Strategic budgeting with the High-Rise BENCHMARK report

Insurance costs for high-rise properties can be unpredictable. Leaders who monitor industry data and evolving market conditions may find it easier to plan for these expenses and compare their approach to others in the field. Benchmarking offers one potential way to calibrate financial plans and spot new opportunities.

FirstService Residential’s 2025 High-Rise BENCHMARK report delivers exclusive analysis of operating costs and budget patterns in major North American cities. By examining data from comparable buildings, boards will be better positioned to discuss their community’s allocation for building insurance or highlight areas for possible improvement.

Curious about the latest insurance topics and budget best practices? Watch our panel: BENCHMARK: The guide to high-rise operating costs and budgets.
 
In this panel, industry professionals share their outlook and discuss insurance markets, reserve funding, staffing, and more.

Get your free copy of the 2025 High-Rise BENCHMARK report and take the next step toward an informed financial strategy.

To see insights from our 2024 High-Rise BENCHMARK report and panel click here.
 

Financial solutions powered by experts

Tackling high-rise insurance and budget complexity is simpler with a partner who knows the industry inside out. FirstService Financial, a trusted affiliate of FirstService Residential, provides top-tier banking and insurance support for managed communities and properties.

Contact us to learn more about how FirstService Financial can support your building’s financial well-being.

To learn more about how FirstService Residential can support your community, contact a member of our team.