Why Purchase Condominium Insurance?
Why purchase Condominium Insurance when your homeowners association already insures the building? Before answering the question, lets outline the basic coverages of a Condominium Policy:
- Personal Property Coverage: Your personal belongings are covered against losses from fire, theft, and other perils.
- Personal Liability Coverage: This coverage pays for bodily injuries to other people or damage to their property resulting from unintentional acts committed by you or a qualified household member, whether its on or off your premises. Some policies also include the acts of your pets.
- Loss of Use Coverage: In the chance your Condo is damaged or destroyed from a fire or other peril, this coverage reimburses you for expenses associated with temporary lodging.
Since these three categories of coverage are not included in your HOAs building policy, the real question should be: Can you afford not to purchase a Condominium Policy?
If there was a fire, can you afford to replace your furniture, electronics, and clothes? Can you afford to continue paying your mortgage and pay for temporary lodging while the damage is being repaired? If you cannot, then you should purchase a Condo Policy!
Before you begin the process of shopping for a policy, here are some initial questions you should answer:
- How much Personal Property coverage do you need? The easiest way is to create an inventory of your belongings with an amount to replace each item.
- How much Personal Liability coverage do you need? Typically, policies start at $100,000 in coverage. If you have assets to protect, such as the equity in your condo or your savings, make sure you have enough coverage so you do not have to liquidate your assets to cover the lawsuit.
- Find out what portion of the building your HOA policy covers! This is a vital step because each HOA is different. Some HOA policies stop at the drywall. If this is the case you need additional coverage to protect your flooring and other fixed elements of your unit. Determine how much money you would need to spend to replace your flooring, cabinets, countertops, baseboards and/or crown molding, etc.
When you begin shopping for your policy, here are a few questions you should ask before you make a decision:
- Does the policy depreciate the value of your personal property? If so, what is the cost for a complete contents replacement endorsement?
- What are the specific perils covered?
- Are the acts of your pets covered in the Liability portion of the policy?
- Is there coverage available for assessments imposed on you by the HOA. If so, how much coverage is available and at what cost?
One of the biggest mistakes you can make is shopping by price alone! Do your homework and make sure you understand what you are purchasing. Are you purchasing from a local personal agent or a call center? A good personal agent will help guide you through the process and be there in time of need. A bad personal agent will not spend the time to understand your needs and quote you a policy that might not work for your situation. Like a bad personal agent, call center sales personnel may not have the knowledge to determine the right coverage. Though price should be a factor in your decision process, spending a little more to purchase through good personal agent can make the unfortunate time of loss a more manageable process.
John Peck
Peck Insurance
Licensed Agent - Registered Representative
http://www4SanDiegoInsurance.com
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