How much condo insurance an owner needs is one of the more challenging questions I must answer when talking with someone who’s buying or owns a condo. Regardless of how the policy is written (see last week’s post, https://wiseinsurancegroup.com/two-ways-condo-insurance-can-written/), the amount of coverage must be sufficient to protect the finish out of the home and their personal property or contents. Let’s examine how to approach both areas.
Finish Out: The finish out coverage amount must be enough to rebuild the interior of the condo including interior walls, wall coverings (standard paint, custom paint, wall paper, paneling, etc.), electrical, light and plumbing fixtures (plugs, ceiling lights, sconces, sinks, faucets, tubs, etc.) and floor coverings (carpet, tile, wood, etc.) on a replacement cost basis. Replacement cost should address materials as well as the labor cost to do this.
Some carriers provide a replacement cost estimation tool that estimates this for me while others don’t. When working with those that don’t, I either borrow the amount needed for finish out from another carrier and use that, or I follow a range based on the grade of finish out. The rules of thumb were provided to me by a builder friend and are below.
- Builder’s or economy grade about $50 a square foot
- Semi-custom grade between $55 and $75 a square foot
- Custom grade runs between $75 and $125 a square foot
- Luxury grade runs $130 a square foot or more
Once you determine your grade, then multiply the cost per square foot by the number of square feet and you’ll know how much coverage is needed to rebuild your home.
Contents: Determining what it will take to refurnish your home and replace your other personal property can also be challenging. I first recommend looking at your furniture and making a list of each item and an approximate cost to replace it based on where you purchased it. Visit store websites for current pricing if it’s been a few years since you bought your sofa, tables, artwork, decorative items, electronics, and chairs.
Next look at the kitchen and begin to make a list of what you own estimating the cost to replace cookware, dinner ware, glasses, etc. Visit store websites to help determine cost. Next, move to your closet and dresser to do the same thing with all your clothing keeping in mind where you shop. Add all of this up and you’ll have an accurate estimate of how much coverage is needed for your personal property.
This may take a couple of hours, but by doing this exercise you’ll have an excellent idea of how much condo insurance you need. What do you think? Share your comments, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!