How much condo insurance is enough?

Let's first discuss condominium insurance, as this has subtle difference compared with homeowners insurance.

As a condominium owner, you are only responsible for a portion of the condominium that is your property, as well as share ownership responsibilities for the common areas in the condominium, such as the lobby, building exterior, the elevators, hallways or pool. Your level of responsibility will really depend on the specific rules that are stipulated by your coop or condominium owner's association. You only need to cover your area of responsibility and not the common areas.

To check to know how much condo insurance is enough, you should first check if your condominium association has insurance cover for the common areas and how much cover is provided. There are two kinds of polices - bare walls in and all in. Bare walls in policies cover just the exterior framing and not any fixtures such as the bathroom or kitchen countertops. All in policies include the fixtures as well as the bare walls.

If your condominium association has a "bare walls in" policy, then you will need more insurance to cover for the fixtures, particularly if there have been recent upgrades in your condo such as new countertops, cabinets and flooring.

For us, you should provide enough condo insurance coverage to cover the market value for the interior structure and fixtures - including lighting fixtures, carpeting, countertops and flooring, as well as the condo unit itself and its contents.

Also, you should take note to insure valuable items that may not be included in the coverage of your standard condo insurance, such as jewelry, artwork, furs, as well as valuable collections such as stamp collections or baseball card collections.

You should also determine whether you will get a replacement cost coverage or cash value coverage. The difference between the two may be significant, especially if your condo is old or your appliances have been used for several years. The cash value coverage will pay the value minus the depreciation. The actual value coverage will not deduct depreciation from the payments.

Another area you should look into would be gaps in the coverage. Condo insurance will not provide for catastrophes such as flood or a storm. If your location is particularly prone to these events, then you would need to consider coverage for this.

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