Homeowner's & Condominium's Insurance Basics
Insurance
in general is a necessity for anyone. Whether it is health insurance,
auto insurance, or homeowners insurance, it has become obvious in
recent years that insurance is an absolute benefit to the owner.
In this article we discuss the reasons behind why property insurance
is an absolute necessity for any homeowner.
What
is covered with standard insurance?
Although
every lender's policies are different, generally standard insurance
covers several things:
-
Property Insurance - Covers the damage caused by natural or man-made disasters. This feature of your insurance generally covers any damage caused by fire, lightning, tornados, hurricanes, windstorms, hail, riots, aircraft, vehicles, theft, vandalism, or weight of ice, snow, or sleet.
-
Personal Liability - Covers situations where an individual or individuals may get injured by you, your family, or your property, whereby a lawsuit or bills for medical attention may result. This feature of the insurance covers court expenses as well as the medical expenses required.
-
Personal Property - Reimburses for loss of personal property including you and your family's belongings and the contents of your home. Personal property may include: your clothes, jewelry, sport equipment, trees, and fixtures in your home. But remember that more often than not your policy will state that you will get a portion of the initial value of the belongings back, so make sure to double check when obtaining a quote. You can apply and receive coverage that reimburses you in full for all belongings you have lost, but of course it costs a little extra per month.
-
Property Insurance - Covers the damage caused by natural or man-made disasters. This feature of your insurance generally covers any damage caused by fire, lightning, tornados, hurricanes, windstorms, hail, riots, aircraft, vehicles, theft, vandalism, or weight of ice, snow, or sleet.
-
Living Expenses - In some cases the disaster is large enough to destroy or render your home uninhabitable. In these cases your insurance policy will pay for your stay elsewhere (e.g. hotel, inn) and other expenses incurred such as meals and other living expenses. But keep in mind that there is a maximum limit you can reach with this feature of your insurance.
However, it is important to keep in mind that many of these standard policies do not cover such natural disasters that are more common in the particular area. The most common lacks of coverage is earthquake and flood. If you would like to read more about insurance add-on policies, read our article: "Add-Ons for Property Insurance."
How much damage replacement does my insurance policy cover me?
Every
insurance policy differs from plan to plan and company to
company. Once you receive your quote from the insurance company
or agent, you will notice a maximum limit. That maximum limit states
what the maximum dollar amount you will be covered for when you
are required to rebuild or replace your home, whether or not your
actual costs exceed that limit.
What is condominium or co-op insurance?
For the most part, the insurance policy required to rebuild the condominium complex in the event of a natural or man-made disaster is covered by the homeowner's association. One of the main reasons you pay a monthly HOA fee. However there are some catches with this "master policy" the complex obtains. The "master policy" covers the common areas which include hallways, walkways, roofs, garages, etc. The expense to rebuild the complex itself including the foundation, the insulation, plumbing, electrical wiring, and the walls is covered by this master policy. It does not however, cover the expense to reconstruct each condo or co-op's interior, which may include flooring, kitchens, and bathrooms. This is left up to the responsibility of the homeowner. The installation of kitchens and bathrooms can easily cost more than $10,000 so it is important to obtain an insurance policy to cover those expenses in the case disaster strikes. Luckily with most insurance policies, personal liability is also covered up to a maximum limit. There are additional coverages that you may want to consider including: water back-up, floor, and earthquake; you can read about this in our article:"Add-Ons
for Property Insurance.
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