7 Common Mistakes When Buying Condo Insurance
Purchasing a condominium is an exciting time. You know you’ve made a great decision and you want to protect your purchase. Of course, seeking condo insurance is a good idea, but it’s important to understand the technical details of insurance to be sure of your coverage. While many condo owners make the responsible decision to purchase insurance, many make mistakes that result in a significant loss. These are some of the most common mistakes made when purchasing condo insurance. Don’t let your fears about the cost of insurance keep you from getting the coverage you need.
1. Choosing Cash Value Over Replacement CostWhile you hope to never be in the position to file a claim, you need to have the right coverage if disaster does strike. Unfortunately, many condo owners make the mistake of choosing a cash value reimbursement instead of the full replacement cost. The terms are similar but have different meanings. Cash value means you’ll be reimbursed for the original amount you paid for an item minus depreciation based on the life expectancy of the item claimed. This might seem like a good idea, but it might not be enough to have the item replaced due to the amount of depreciation incurred at the time of loss. For instance, consider the cost of a refrigerator five years ago and the cost of buying one today.
Solution:Ask your independent insurance agent about your options for replacement cost reimbursement in the event you need to file a claim. This option may have higher premiums, but it’s more likely to provide sufficient coverage when you need it.
2. Ignoring the Cost of the DeductibleObviously, the cost of your premium is a major factor in the insurance policy you can afford. Sadly, many people consider only that factor when choosing a policy. A lower premium often leads to a higher deductible, which can be crushing in the event of a total loss. If you ignore the cost of the deductible when you purchase condo insurance, you might find you don’t even have the funds to reach the point where the policy pays out.
Solution:Discuss your current financial situation with your independent insurance agent to understand which policies you can afford while keeping the deductible low enough to manage in the event of a claim. While some insurance companies don’t discuss all of the options upfront, there are usually a variety of coverage options available. You may even be eligible for discounts that will make your premiums more affordable.
3. Skipping the Fine PrintInsurance policies can be complicated, and it might seem like you don’t have time to read through the entire policy before signing on the dotted line. This mistake could mean you’ve agreed to terms you’re not even aware of. All of the print within your policy means something, and it’s important that you read and understand the entire document.
Solution:Read the entire policy and ask questions about the things you don’t understand. Most insurance policies list exactly what is covered under the policy. Many policies don’t cover certain events like earthquakes or flooding. You’ll also want to know if all of your possessions are covered in the event of a burglary. Items that aren’t included should be added as a rider with a personal articles policy.
4. Neglecting to Understand the Terms of the PolicyCondo insurance coverage varies. It’s also different than the homeowners’ policies which most people are more accustomed to. Condo insurance (also known as HO6 coverage) only covers property damage and liability risks inside the condo. Your condo association carries a master insurance policy that covers the building. Assuming the coverage supplied by the condo association is the only coverage you need is a mistake that could cost you in the future since condo association coverage is often “bare walls” coverage.
Solution:Review your condo association master policy and discuss it with your independent insurance agent when seeking additional coverage. Insurance terms like bare walls and studs in coverage only cover what’s inside the condo. This means important issues like plumbing fixtures and wiring problems aren’t covered. All-in coverage provides protection for your possessions, liability in the event of injury, and interior structures like plumbing and wiring.
5. Insufficient CoveragePerhaps the most common mistake made during the purchase of an insurance policy is getting insufficient coverage. Often, condo owners fail to accurately consider the value of their possessions or don’t get the coverage for events that are most likely to occur in the local area. Legal terms can be confusing and many people take an all or nothing approach to insurance.
Solution:Seek a local independent insurance agent who can help you understand all of your options. While an “all-in” policy provides the most coverage, it can be expensive. There are options available allowing you to choose from a variety of coverage options and deductibles that meet your budget. Your trusted local agent might be able to help you find supplemental coverage options like flood insurance or a personal articles policy to ensure you have adequate coverage.
6. Expecting Your Renters to Take Care of CoverageAs a condo owner, you need coverage whether you occupy the space or you rent to tenants. Unfortunately, some owners neglect to purchase insurance before leasing to renters. While your tenants may have renters insurance, they likely won’t have the coverage you need.
Solution:Discuss an HO6 condo insurance policy with your insurance agent. Condo insurance offers a variety of policies to cover the gaps between the coverage supplied by your condo association master policy and the renters’ policy that covers your tenants’ possessions. Additionally, extended liability coverage protects you and your property.
7. Selecting an Insurance Company Based Solely on PriceWhether you’re new to Massachusetts or simply don’t have a thorough understanding of the various insurance policies you need, it’s important to find an insurance agent you trust. Many companies advertise low premiums that make customers assume that all policies and agencies are the same. This mistake leads to most of the problems consumers face when filing a claim.
Solution:Consider a local independent insurance agency to provide you with a variety of coverage options you can trust. Independent insurance agencies work with several insurance providers to help you find a variety of options for coverage that meets both your needs and budget. An independent insurance agency has the ability to provide a more personalized experience and get you the coverage you need at an affordable price.
Learn More About Condo InsuranceThere are many types of condo insurance policies available and purchasing the right coverage can seem difficult. An independent insurance agent can help you understand the terms of each type of condo insurance and offer advice to help you find the right coverage for your unique needs. At LoPriore Insurance Agency, our motto is insurance that fits your lifestyle, and condo insurance is no exception. Instead of selling you a one-size-fits-all cookie-cutter condo policy, our experienced agents take the time to listen to your needs and help you find the coverage that truly suits your unique situation and budget. Get in touch today to learn more about your condo insurance options or get an instant quote for the coverage you need.
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To learn more about how homeowners insurance can protect your business, get in touch with the independent agents at LoPriore today. Our experienced insurance agents are available 24/7 to answer your questions, provide information about our home insurance policies, or provide you with an instant quote.