How Much Dwelling Coverage Do I Need For A Condo?

Condos account for less than 10 percent of occupied American housing units. Despite their relatively small market share, condos are becoming increasingly popular. About one in every five units in newly constructed multi-unit properties are condos.

Condos consistently out-rank apartments in satisfaction surveys. In fact, residents routinely rate condo ownership as just as satisfying as owning a freestanding home.

These appealing dwellings are not without their complications, however. Finding the right insurance coverage, in particular, can be a challenge. Fortunately, calculating how much dwelling coverage you need doesn’t have to be a headache.

Here’s what you need to know to calculate your perfect dwelling coverage for a condo.

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First Things First

The first step to answering the question “how much dwelling coverage do I need for a condo?” is understanding what is already covered.

As a condo dweller, you almost certainly pay condo fees. A portion of those fees goes to fund your HOA’s comprehensive insurance policy. These policies typically cover:

• Damage to shared spaces, including outdoor amenities such as swimming pools
• Damage to exterior sections of the building, including walls and rooftops
• General liability for injuries received in shared spaces

If your HOA has a “bare walls” policy, its insurance will also cover your unit’s:

• Walls
• Floors
• Ceilings

If your HOA has “all-inclusive” or “single entity” coverage, its insurance will cover your walls, floors, and ceilings, as well as everything built into your condo. This may include:

• Appliances
• Light fixtures
• Cabinetry

Importantly, in most cases, this coverage extends only to stock items. Upgrades you make to your appliances or fixtures are not likely to be covered.

In all cases, you can expect HOA insurance to pay for damage caused by specific disasters, such as storms or fires. Incidents within your apartment, such as accidents or vandalism by guests, may not be covered, however.

Checking Your HOA Policy

If you do not have a copy of your HOA’s master insurance policy, request one before purchasing private coverage. Review exactly what is and is not covered in detail. Ask questions of your HOA representative or your insurance agent, if necessary.

Understanding what is and is not already covered will allow you to accurately determine what portions of your condo you need to take into account when purchasing coverage.

HOA Policy Limitations

When reviewing your HOA’s policy, don’t forget to check for maximum coverage limits. Many policies put a cap on the total amount the policy will payout. While these limits make sense for the insurance company, they can be a problem for unit owners.

For example, a policy might limit the total payout an HOA can receive in the event of a fire to $500,000. If the property suffers a fire and takes $600,000 of damage, the HOA will still only receive $500,000.

If the property has an emergency fund, it may be able to use that money to cover the $100,000 difference. If it does not, unit owners may be required to cover that difference themselves.

As such, you should check your HOA policy’s limits. If they are low and you do not believe that they will cover all of the probable expenses in the event of an incident, you may wish to build additional coverage into your own policy. Doing so will ensure that you do not end up footing an expensive and unexpected bill after an emergency.

Private Policies and What They Cover

Now that you know what you don’t have to cover, it’s time to look at what you do. When choosing dwelling insurance, condo residents can expect to need the following types of coverage:

• Real personal property
• Personal possessions
• Liability
• Loss of use
• Medical expenses
• Flood insurance

How much coverage you will need in each category depends on a variety of factors. These include your:

• Geographic location
• Personal and physical needs
• Possessions and lifestyle

When asking yourself, “how much dwelling coverage do I need for a condo?” it is best to evaluate each type of coverage in turn.

Real Personal Property

If your HOA has a “bare walls” policy, you will need extensive Real Personal Property coverage. If your HOA has a more generous policy, you may only need enough RPP coverage to cover the difference between the condo’s standard finishes and any upgrades you have made.

To determine how much coverage you need in this category, make a list of all the fixtures and appliances in your unit. This includes:

• Lighting
• Kitchen appliances such as stoves, dishwashers, and refrigerators
• Laundry facilities
• Cabinetry in the kitchen and bathroom(s)
• Rugs and carpets

If your HOA has a “bare walls” policy, choose a private policy that insures all of these items for their full value. So, for example, $600 in coverage for your dishwasher.

If your HOA policy covers the base cost of these items, you can select a policy that covers only the difference between that amount and what you have. For example, you might need $200 in coverage to cover the difference between the $400 covered by the HOA policy and the total $600 cost of your upgraded machine.

You may also be able to get this type of gap coverage through Loss Assessment coverage.

Personal Possessions

Personal possessions are often the largest category for which condo residents need coverage. Determining how much coverage you need for these items can feel complicated and unwieldy. A condo dwelling coverage calculator can help.

To get started, take an inventory of what you own. Look at both large and small items, including:

• Furniture
• Clothing and jewelry
• Electronics, including DVDs and video games
• Artwork
• Collectibles and collections

Pay special attention to items that are unusually valuable, as these may require special or additional coverage or insurance riders.

Actual Value vs Replacement Value

Once you have listed your personal possessions, you will need to decide if you want an actual value or replacement value insurance policy. Actual value policies insure your items for their current resale value. Replacement value policies insure your items for what it would cost to replace them for a new version of the same thing.

For example, imagine that your sofa cost $2,000 brand new when you purchased it several years ago, and its depreciated value now is around $1,000. If the sofa is destroyed or stolen, an actual value policy will give you $1,000. In theory, that will allow you to buy another used sofa of similar quality.

A replacement value policy will give you $2,000, which is enough to buy a new sofa in exactly the same style as the one you lost. Replacement value policies cost more upfront, but actual value policies cost you more when you have to replace things after an emergency or a loss.

Liability

Liability coverage is a type of insurance that you buy through your condo dwelling coverage policy, but it is not strictly related to your condo. Instead, it is an overarching category of coverage that provides insurance protection should you be sued for almost any reason. It can overlap with medical coverage and your vehicle insurance policy if you have one.

This vagueness can make deciding how much liability coverage you need challenging. The simplest way to calculate how much liability coverage to purchase is to add up the total value of your:

• Bank accounts
• Investment products
• Vehicles
• Real assets such as property
• Any other assets of which you are whole, or part owner that lawyers might pursue should you be sued

When you have added all those things together, purchase coverage equal to or higher than that amount.

Loss of Use

Loss of use coverage pays for your expenses if you are forced to live somewhere else due to damage to your condo. This may include food, hotels, and other reasonable costs.

How much loss of use coverage you need depends on your personal situation. For example, if you have family nearby you are comfortable staying with, you may need very little coverage. If you have chronic health conditions or other special needs that will result in higher-than-average costs, should you be forced into temporary housing, you will need extra coverage.

Medical Expenses

If a visitor is injured in the public spaces of your condo building or property, your HOA’s policy should cover their medical expenses. Your personal policy will cover injuries and incidents:

• That occurs in your condo
• Caused by you, your pets, or a member of your family anywhere on the property
• Caused by you, your pets, or a member of your family off property, such as at another person’s home

It is essential to purchase generous medical expenses coverage. While you may not think that the likelihood of needing it is high, medical expenses can rack up quickly. This coverage will protect you from hefty bills in the event that something does happen.

If you have pets, double-check with the insurer that they are covered. Some species and breeds may not be covered by standard policy terms.

Flood Insurance

Condo policies are much like homeowners’ policies and renters’ policies in that they do not cover flooding. Flood insurance must be purchased separately or specifically added to a policy.

Some condo owners mistakenly believe that they do not need flood insurance because:

• They are not in a flood-prone area.
• Their condos are located on a high floor in their building.
• They have other insurance.

This is never true. All condo residents need flood insurance because water damage of any kind is often not covered by other types or categories of insurance. Moreover, flood damage is extremely expensive to repair.

Flooding can also lead to secondary hazards, such as mold. These hazards are often not covered unless you have flood insurance.

Other Considerations

There are a few more things to take into consideration when selecting dwelling coverage.

• State minimum limits
• Mortgage lender requirements
• Blanket or scheduled coverage for valuable items
• Umbrella coverage
• Green Rebuilding clauses

Check with your condo’s HOA or state authorities to see if there is a minimum required level of coverage in your state. Not all states have such requirements, so this may or may not apply to you.

If you have a mortgage on your condo, your lender may require that you carry a minimum amount of coverage, as well.

If you own items of particularly high value, you may need extra coverage. Common examples of such items include:

• Jewelry
• Artwork
• Collectibles

Individually or together, these items can exceed standard category limits. To avoid coming up short after a disaster, you will need to purchase additional coverage specific to these items. You can do this through blanket coverage policies, scheduled coverage policies, or riders.

Umbrella coverage can fill in gaps in your policy. It can cover expenses that fall outside other categories or that exceed standard category limits. It can provide extra peace of mind for condo owners who don’t want to pay out of pocket for anything should an emergency arise.

Finally, you may want to consider green rebuilding clauses. Under these terms, your insurer will provide you additional funds when you need to make repairs or replace fixtures after a disaster if you use qualifying eco- or energy-friendly products. Terms can vary, so check with your insurer for details when purchasing.

Calculating Coverage

Once you have assessed your insurance needs by category, it can be helpful to use a dwelling coverage calculator to come up with hard numbers. Use the following steps to get the most out of how much condo insurance do I need a calculator.

1. Determine which types or categories of coverage you need
2. Make an inventory of your condo’s appliances, fixtures, and upgrades.
3. Make an inventory of your personal possessions
4. Make an inventory of your real assets which might be at risk if you are sued
5. Have professional assessments done where necessary to get accurate numbers
6. Check how much coverage you already have under your HOA’s policy
7. Plug the above numbers into an online calculator to find your total insurance coverage needs

Get the Coverage You Need Today

Buying dwelling coverage for your condo doesn’t have to be overwhelming. Get a quote today, or contact one of our agents for help designing a plan perfectly customized to your individual needs.