Determining amount of walls-in insurance needed

[Michele G.]

My question is how to determine the proper amount of walls-in insurance to carry. 

The unit is a 1600 sqft, 4 bed, 2 1/2 bath, 2-story condo with 2 car detached garage in Orange County, CA. Since the HOA covers the exterior I only need to have a walls-in policy.

What is a good way to determine the right amount of building coverage? I don’t want to be underinsured, but even the agent said their recommended “rule of thumb” amounts seemed really high for the unit. Since it is a 2 story unit I do worry about a leak in an upper bathroom creating problems on both floors.

What deductibles do most investors have? $1,000? $5,000? Do you base it on the cash flow/reserves saved for the property? 

I’m looking for reasoning that I can apply to my current properties as well as future investments.