Guidelines for townhouse insurance

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sergio
Posts: 405
Joined: Sat Jun 20, 2015 6:52 pm

Guidelines for townhouse insurance

Post by sergio » Mon Sep 09, 2019 6:20 pm

I live in a very large townhouse complex (250+ units) that's been around since the 1970s.

The HOA has a master policy with a $10k deductible for $50+ million, basically the amount needed to raze and rebuild the entire complex if something were to happen. This is a walls out policy, so in the worst case scenario (a total teardown and rebuild), I would get a new townhouse with plywood flooring, no appliances, fixtures, paint, trim, kitchen, and an unfinished basement.

Are there any guidelines for choosing the amount of personal building coverage limits (this will cover flooring, finishing bathrooms, new kitchen etc.)? It seems with labor costs nowadays a medium size bathroom would run at $5-10k. A finished basement would easily be around $15k. My dad and I gutted my kitchen and only replaced the cabinets, counter top, backsplash, and flooring, and the materials alone were in the $10-12k range.

My place is two floors (each 760 sq ft) plus a finished basement, 4 bathrooms total, and a very small kitchen. An insurance agent I talked to suggested $25-75 sq/ft which is an enormous range.

123
Posts: 4963
Joined: Fri Oct 12, 2012 3:55 pm

Re: Guidelines for townhouse insurance

Post by 123 » Mon Sep 09, 2019 7:24 pm

Based on the insurance agent's high-end recommendation the total insured value would e $171,000 (760 sq ft X 3 X $75). You should ask for an estimated price for such a policy that also includes personal belongs coverage, some liability coverage for accidents, etc. You may find out that that there is not much variation in the price whether you insure for $100k, $150K, or $175K due to the way risk is calculated in some kinds of policies. You should insure for what it would cost for a competent licensed contractor(s) to do the work. Due to infrastructure issues replacement of components due to a major loss in most cases is not a DIY project. Don't get bogged down in the details and count the number of nails that might be needed. Use a square foot value that is consistent with the level of amenities the condo has (i.e. are cabinets custom or from a bargain cabinet shop, are counter tops granite, marble, or formica, are appliance built-in (oven, range, hood vent, microwave) or easily removable)?.
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Topic Author
sergio
Posts: 405
Joined: Sat Jun 20, 2015 6:52 pm

Re: Guidelines for townhouse insurance

Post by sergio » Tue Sep 10, 2019 9:41 am

123 wrote:
Mon Sep 09, 2019 7:24 pm
Based on the insurance agent's high-end recommendation the total insured value would e $171,000 (760 sq ft X 3 X $75). You should ask for an estimated price for such a policy that also includes personal belongs coverage, some liability coverage for accidents, etc. You may find out that that there is not much variation in the price whether you insure for $100k, $150K, or $175K due to the way risk is calculated in some kinds of policies. You should insure for what it would cost for a competent licensed contractor(s) to do the work. Due to infrastructure issues replacement of components due to a major loss in most cases is not a DIY project. Don't get bogged down in the details and count the number of nails that might be needed. Use a square foot value that is consistent with the level of amenities the condo has (i.e. are cabinets custom or from a bargain cabinet shop, are counter tops granite, marble, or formica, are appliance built-in (oven, range, hood vent, microwave) or easily removable)?.
Thanks. I did a quick calculation for what it would cost to refinish the entire interior making it similar to what I have now, and came up with around $75k. I'll add another $10k buffer to that. Personal possessions are a bit lower but when I started adding up furniture, laptops, appliances, jewelery, every belt and tie, and so on, it started getting up there shockingly quick... So $171k split 50/50 for building + personal possessions doesn't seem that out of line.

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