How much dwelling coverage do I need for a condo?

How much dwelling coverage do I need for a condo?

You need enough dwelling coverage on your condo insurance to cover everything inside the unit for which you're responsible. To find out how much condo insurance you need, first you will need to check a few important things.

1. What does your HOA cover? Read over your HOA's policy to find out what type of coverage it provides and what you are responsible for insuring. That will tell you what type of condo insurance you need to buy.
2. What does your mortgage company require? Your lender likely has requirements for your condo insurance policy. This may include a certain minimum for dwelling insurance.
3. Have you done any upgrades? You will need to insure any upgrades you have done to the interior of your unit. Consider things like upgraded fixtures or new built-in appliances when calculating how much dwelling coverage you need.

Dwelling coverage for condos

Dwelling coverage on a condo policy is very different from a homeowners policy. That’s because what you’re responsible for differs quite a bit. In fact, dwelling coverage is main difference between condo and homeowners insurance.

On a condo policy, you’ll usually see dwelling coverage called building property coverage, although some companies may use the term dwelling. It covers everything on the interior of your condo that isn’t insured by the association’s master policy.

There are two main types of condo policies when it comes to building property coverage, all-in (or all-inclusive) and bare walls (or walls-in) coverage.

All-in or all-inclusive

With this type of policy, you’re responsible mainly for your personal property. The condo association covers both external and internal features of the condo itself. You may need a minimal amount of building property coverage in this case.

Make sure you’re clear on exactly what you are responsible for; you may need your own coverage for any upgrades you make to the interior, like new light fixtures or an upgraded stove.

Bare walls or walls-in

With this type of policy, you’re responsible for everything from the walls in. So, you need to cover flooring, cabinetry, fixtures, sinks and tubs and anything else that’s not your moveable personal property.

In this case, you need considerably more coverage. Again, make sure you understand exactly what you need to cover.

How to calculate dwelling coverage for a condo

Once you know what type of policy you need, you can figure out how much coverage to buy. Your insurance company or insurance agent can help with this process. Bear in mind that your mortgage company will also have a say and may have a minimum requirement.

There are a couple of ways to calculate dwelling or building property coverage yourself. A common approach is to insure your condo for 20% of its total value. 

So, if your condo is worth $200,000, your dwelling coverage at 20% would be $40,000.

You can also calculate it based on the square footage of the condo, using an estimate of reconstruction costs per square foot. However, because construction costs vary by location and by the materials used (granite counters are more expensive than laminate, for example), this can be less than accurate.

You don’t want to overpay for coverage you don’t need, but you don’t want to be underinsured either. So, err on the side of caution when it comes to choosing your condo’s building property insurance coverage, and get expert help to choose the right amount.

Frequently asked questions

Do I need dwelling coverage for a condo?

You likely need at least a minimal amount of dwelling coverage (building property coverage) for your condo. Even if you have an all-in HOA condo insurance policy, you will still want to cover any upgrades or improvements you do on the inside of the unit. You may also be required by your mortgage company to have dwelling insurance.

What does dwelling coverage for a condo cover?

The dwelling coverage portion of your condo insurance policy covers anything on the interior of the unit that isn't covered by the HOA policy. That may include cabinets, countertops, flooring, built-in appliances and fixtures. These items are not covered by the personal property coverage portion of your condo insurance.

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