How Much Insurance Should I Buy For My Townhouse?

We are downsizing from a single family house we owned to a townhouse. Our house was underinsured, we could not have replaced it if it burned down, but we were in control, almost all the risks came from our actions. Now we have bought one of four sections of a townhouse and our agent tells us to only buy $5K per room of insurance, say $50,000 when our investment is over $300K. If another owner burns the place down, is the association obligated to rebuild the townhouse for us or will they walk? How do I protect our investment?

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Bankshot

asked 3 years ago

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I would insure it for replacement costs. You will have to read the association's insurance policy before you decide they will do anything if your house is burned by one of their's. I would also consider getting replacement cost on my belongings as they are not usually covered in a fire insurance policy unless you add a personal property rider. Then you will need to photograph everything of value and store them in a bank safety deposit box along with your other important papers and anything else you don't want to lose in a fire or other disaster, it doesn't say where you are, but that could be a consideration as well. It is better to be over insured than under, 5K per room won't even pay your mortgage off, and that is another thing I would look into, good luck!