First you need to know what your condo association master policy covers. Some cover the inside of the unit and some only cover walls out, meaning in case of a loss, you are responsible for the structure and contents of the unit. If you have "all in" insurance, it does not usually cover any improvements that have been made to the unit.
Based on what you are responsible for, you then have to decide on a coverage amount. For walls in, you have to estimate what it would cost to rebuild your condo in a worst case scenario. This has very little to do with the purchase price or value of the unit, although finishes make a difference. If you're a giant nerd, you might read a construction estimation book and use it to calculate that walls in reconstruction costs about 50% of the price of new construction. You can then use that to create an estimate of how much structure coverage you need.
Then you determine how much it would cost to replace all your STUFF. As a Mustachian, this might be much less than the "suggested" amount. You also have a choice of replacement value coverage or coverage that covers the depreciated cost of your belongings. If you're feeling ambitious, you can do a home inventory to determine how much your stuff is worth and how much it would cost to replace.
Then there is the liability portion of insurance coverage, which is protection against lawsuits. If you have substantial assets, you want to make sure you have adequate liability coverage.
Finally, you decide on your deductible. Higher deductibles lower your premiums and can be paid for out of savings. You can do an easy calculation of how long you'd have to go claim free before the premium difference would make up the deductible difference.
For me, here's how the math comes out.
1200 sq ft at $75/sq ft = $93,150 in dwelling coverage
$30,000 in personal property replacement with replacement cost coverage (we've only insured what we'd actually replace, so replacement cost makes sense)
$300k in liability insurance (we have an umbrella policy that requires this liability limit)
$1500 deductible
Premium is $344/year
To me, insurance is to insure against losses that you either can't cover or that would cause significant financial hardship. Condo insurance is bizarre in that depending on how you select your coverages you can either end up way over covered or way under covered. Honestly, your policy sounds in the ballpark to me.