Home Insurance - How much?

[eryx]

I live in a condo and have home insurance. The problem is I have to pick the amount of insurance. The HOA pays for everything that is "External"; I have to pay for what is inside.

I have no idea how to estimate the replacement costs of what is inside my place. I could go through and add up all the furniture, clothes, electronics, etc, but that would be incomplete b/c I don't know that cost of appliances, plumbing, electric, fixtures, countertops, carpet, etc.

So are there any good rules of thumb out there? Google didn't help too much.

 

[tightasadrum]

Just ask your wife.

 

[W2R]

Maybe your insurance company can guide you? Or, maybe that is like the fox guarding the henhouse.

My insurance company persuaded me to get more for my house's contents this spring, even though I told my agent that my contents weren't worth that much. She pointed out that I would probably be buying more as time went on, and that the higher limit for contents really didn't cost very much more.

 

[Walt34]

If you lost everything inside how would you go about replacing it? All brand new store-bought stuff, or are you going to hunt the consignment shops and garage sales?

Either way, pick that number and insure for that amount.

Be sure to understand the difference between "current value", which is what your stuff is worth if you sold it now, and "replacement value" which is what it would cost you to go out and buy all new stuff in stores. Some policies only insure for current value. If you want replacement value the premium will of course be higher.

 

[Martha]

We had a rental condo for a while and insured it for the purchase price, despite the fact that the association insurance covered the exterior.

Plus, you would need to add the personal property too.

 

[Ronstar]

I have a condo and the HOA insures the bldg. I have to insure the contents. I wanted to insure the contents for around 5k, but I think I remember the insurance co saying that $59k is the minimum they would accept for contents. Part of my primary home insurance covers the condo also, like personal injury, etc.

 

[Khan]

Should it also include liability (you or a guest does something stupid/expensive)?

 

[OAG]

I live in a Condo. The way I look at it is: what would it cost me to replace the "stuff" I have to have (assuming a catastrophic fire, tornado, etc.,). That gives me part of the number, thinking "replacement cost coverage" for that "stuff". The second part of the number is LIABILITY (the UPS guy falls off the steps and sues). I want to protect my endangered assets (those some lawyer would want to attach). Combine those two parts and you should have the basis for your policy. Example in my case I have about 75K of "stuff" and 300K of assets that "could" be attached. As an aside get the digital camera (or video camera) out and take pictures of all the "stuff", put that on a CD and send it off to a trusted family member/friend for safe keeping (and update it annually). IMO sounds like a decent "plan"!

 

[ziggy29]

Normally you'd put in the details and the insurance company would recommend an insured value. Does that not apply to condos?

It may be true that insurance companies may sometimes "pad" the insured value. BUT -- if you take less than their recommended amount, if it costs more to replace a ruined home you're likely stuck with the overage. If you accept the insurer's estimate of the replacement cost -- and keep it updated annually -- you'll often be automatically covered for at least some level of overages in the cost of rebuilding.

So if the insurer estimates $225K for your home but you believe it will cost only $200K and insure it for $200K, if it winds up costing $240K you'd eat $40K, but if you insured for the full $225K as was recommended, it might all be covered. But do check this policy as this feature isn't a part of all of them.

 

[OAG]

Normally you'd put in the details and the insurance company would recommend an insured value. Does that not apply to condos?

It may be true that insurance companies may sometimes "pad" the insured value. BUT -- if you take less than their recommended amount, if it costs more to replace a ruined home you're likely stuck with the overage. If you accept the insurer's estimate of the replacement cost -- and keep it updated annually -- you'll often be automatically covered for at least some level of overages in the cost of rebuilding.

So if the insurer estimates $225K for your home but you believe it will cost only $200K and insure it for $200K, if it winds up costing $240K you'd eat $40K, but if you insured for the full $225K as was recommended, it might all be covered. But do check this policy as this feature isn't a part of all of them.

Condos are different in that the major cost of replacing the building is usually covered in insurance you are buying as a part of your monthly/annual condo fee. Basically, you are purchasing a "renters" policy. The cost is a LOT less than regular homeowners policies (like about 25% of a full blown HO-1 policy). Of course if you want to over-insure I am sure the policy issuer will be more than glad to take the extra premium. Additionally, when purchasing a homeowners policy you should not pay to insure the land (it will always be there (barring a sink-hole)). Also you can set up most HO-1 policies to esculate automatically with the carrier for both increased value D) and changes in the building codes.

 

[ziggy29]

Condos are different in that the major cost of replacing the building is usually covered in insurance you are buying as a part of your monthly/annual condo fee. Basically, you are purchasing a "renters" policy. The cost is a LOT less than regular homeowners policies (like about 25% of a full blown HO-1 policy).

Well, yeah, but I guess I was referring to the master policy that the HOA has to maintain (your monthly dues at work). Seems to me that if the HOA underinsures, you could have a massive "special assessment" if disaster struck.

I used to own a condo and for the most part is was a "contents" policy like renters' insurance though I think there were a few additional coverages, such as upgrades and renovations that might increase the cost of replacing the interior with like materials.

 

[OAG]

Ziggy: What you say is so true. However, I guess all one can do "is trust but verify".

 

[Texarkandy]

I've always insured my house with a view towards catastrophic events only with minimal premium.

Insurance is a "bet".

I've always wondered how the odds of the house burning down, getting burglarized, etc stack up against just taking all those premium dollars down to the casino and putting them on the blackjack table.