How to value your homeowners policy for condo units

For the most part when it comes to the valuation of insurance policies on condos the insurance companies allow owners to state their own value. Over insuring can be a big waste of money and under insuring can be devastating when your home is damaged. The biggest mistake homeowners make when valuing their condo units is looking at their purchase price! Homeowners do not have the option of abandoning the property when its damaged they are still responsible for maintenance and taxes on it and the cost of repairs may be larger then the value especially when you have emergency services and maybe even mold to deal with. Here are some guide lines you should use when valuing your condo.

Bedrooms: standard bedrooms including master that include standard flooring such as carpet tile or laminates 7-12,000 each depending on finishes. Use higher values for specialty paint work or expensive wall or floor covering.

Bathrooms: standard single vanity tub or shower and one toilet 30-75 sqft bathrooms about 10,000 each add for extensive tile work and decorative details.

Living areas: value them like bedrooms if you have a living room dining room and family room count them as 3 bedrooms if you have only one large living area use the high number for a bedroom. Add for specialty floor & wall coverings such as faux paint, mirrors, marble or hardwood floors.

Kitchens: kitchens can be tricky, you have to look at appliances and cabinet grade to determine value, for the most part appliances will only be damaged in a major loss such as fire, cabinets tend to get damaged easily in water leaks. cabinets should be valued at a minimum of $300 per ft of cabinets add cost of appliances (minimal appliances should be valued at about $2500-3000) then add about 5-8,000 for the room itself again add more if you have special trim or wall and floor coverings.

Based on these numbers you should be insuring a 2 bedroom 2 bathroom 1,000 sqft condo with average finishes for about $65,000.  It may seem high in days where values are low and you may be able to purchase the same unit for 1/2 that but here is what your costs would look like from a broken ice maker water line:

Emergency service remove water and dry out walls 5,000-10,000 depending on how far the water went.
Mold remediation and testing and clean up $10,000 (policy limits)
Kitchen cabinets damage    $10,000
Flooring in kitchen and surrounding living areas $6,000
Base boards and paint $4,000

If you look at the above you had spent almost 1/2 your policy limit on a simple water leak, now if you happen to be away for the weekend when it happened and water leaked for 3 days you may be looking at a bigger loss.


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