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Condo insurance policies don’t really have dwelling coverage the same way homeowners policies do. Instead, they have what’s called building property coverage. The amount you'll need depends on what the condo association's master policy covers. 

An all-in and all-inclusive master policy covers more than a bare-bones-in policy, which means you may be able to get less building property coverage (or none, in some cases) if your HOA master policy is all-in and all-inclusive.

Before you buy a condo policy, make sure you know how much coverage you need.

Key takeaways

  • A condo policy covers the inside of your unit, while the exterior is covered by the HOA, so dwelling coverage differs from a homeowners policy.
  • The rules of your association will dictate what you’re responsible for insuring on the inside of the unit and thus how much building property coverage you need.
  • Your mortgage company might have a minimum requirement for building property coverage.

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 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.

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