Condo Insurance

Before you purchase condo insurance, there are a number of important issues to consider. Condo insurance is not the same as a traditional home owners insurance policy. Instead of covering the outside of the house too, condo insurance only covers from the drywall in. Your association is responsible for the roof and other exterior damage.

Your first decision is what deductible to set. Your deductible is the amount you pay before the insurance kicks in. For instance, on a $15,000 claim, if you had a $5000 deductible, the insurance company would only give you $10,000 but if you had a $1000 deductible, they would give you $14,000. The deductible is a key factor in determining what your policy premiums are. The lower your deductible amount, the higher your monthly payments will be. If you can cover a good portion of any claim from savings, go with the higher deductible.

Many insurance companies will drop you if you make too many claims a year (2 is sometimes considered “too many”) so a higher deductible will keep you from making claims on small items.

The next thing you need to determine is whether you want actual cash value or replacement value for your property. If you spent $900 on a TV 2 years ago, would you want to have the money to buy a comparable new TV (replacement value) or buy a used 2 year old TV off of Craigslist (actual cash value)? If you don’t want to be replacing your belongings from garage sales, you should go with replacement value, but it will cost you more money in premiums.

If you rent out your condo, you should require the renter to buy renter’s insurance. The inside of the condo, minus the renter’s personal items, are your responsibility. Renter’s insurance helps protect you if the renter damages the property.

That’s what you need to know about condo insurance.

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