Tell Me About Home Owner's Insurance

In My Humble Opinion
1

I’m buying my first condo, and I’m in a bit of sticker shock over Home Owner’s Insurance. Renter’s insurance is usually around $100/year for me, but the quotes I’m seeing online are several times that.

What I’m particularly confused by is something State Farm’s web page calls “Dwelling Amount”

Also:

So, do I put in how much I paid for my place? Or would it generally be cheaper to rebuild some damage than what I paid for it? If in the worst case scenario my unit gets burnt to a crisp, how much will it take to rebuild it?

Also, if a fire in my unit damages the upstairs unit, am I liable for that? Or is it up to my neighbor to be covered?

2

IANAn insurance agent, but a homeowner and former owner of a condo rental unit. The dwelling amount is how much it would cost to replace the actual structure (or your part of it). What you bought presumably included not only the actual unit itself but your share of the condo association’s common property – the open space, parking areas, pool or tennis courts, anything that’s owned and used in common by all the owners. You don’t need your insurance to cover that part, the homeowners’ association should have its own insurance that covers those things, and your monthly fee includes your share of that.

Your homeowners’ or condo association, or the insurance agent, should be able to give you guidance as to the amount in each category, and to advise you as to what kind of coverage you need.

Homeowner’s insurance generally also includes liability insurance to cover you in case someone is hurt on your property, or some action of yours within your unit causes damage to someone or something. There is usually a coverage for theft as well, so that if somebody breaks in and steals your t.v., for example.

These associations differ in what is considered common vs. individual property. In the unit we owned, anything inside the walls was considered ours, our responsibility and our potential liability. The outer walls themselves were community property. We had a fine mess when the upstairs neighbor had a leaking appliance that damaged their floors, the area between their floor and our ceiling, our ceiling, our walls and our floor. IIRC, we eventually got a settlement from them that they paid us for our costs and then invoked their own insurance to see if they could recoup anything. I have no idea if they did.

In the case of a free-standing house, the dwelling coverage is for the structure itself. The total property value is higher, since it also includes the land.

The cost of the insurance depends on many variables including, but not limited to, the type and age of the structure, and the location. It also covers contents – your furniture and valuables – just as your renter’s insurance used to do. Shop around.

3

The information I am giving you is state specific so please check with a local agent for your local coverage.
Condos are insured two ways, the most common way is for the association to carry coverage for the main structure, the roof the walls ECT. Everything from the paint on the walls out. You as an owner are responsible for every thing from the paint on the wall in. All cabinets, fixtures, carpet, baths, toilets ECT. It would be very reasonable for the policy to be several times your renter’s coverage. In this instance coverage would be say 50k for the fixtures and then whatever is an appropriate amount for your contents, liability is also included.

The second and less common way to insure a condo is if the association falls apart then each owner has to carry what amounts to a small home policy on the appropriate portions of his condo. Walls, roof, everything, say 125 k instead of the 50k for paint in. This is less common and should be apparent by your condo association dues.
Hope this helps
MrPeabody

4

You generally don’t want to cheap out on homeowners insurance. It covers a whole lot of things that can go wrong like you get sued for personal injury or theft of your belongings. We had a 50% loss claim this year and it took 5 months arguing with insurance company because our claim was almost all of the insured amount but only 50% of the house was destroyed. After that, I increased coverage to the maximum allowed and it wasn’t much more expensive. You will generally find that the cheaper options only save you a little money but expose you to big financial consequences if things come to pass. Unlike extended warranties in store, it is smart to make sure you are covered for everything in your home.

5

I am an insurance agent and as far as I am aware homeowner’s insurance generally covers your entire dwelling and all of the property located inside. Also keep in mind that your homeowners, or in your case, condo owner’s insurance, generally covers all of your belongings no matter where they are. For example, if you have several thousand dollars worth of property in your vehicle and it is stolen your auto insurance would cover your vehicle and your homeowners would cover the property located inside. It also covers property you have rented or borrowed that gets damaged or destroyed. There are several different levels of homeowners insurance and I would advise sitting down with your agent and having them explain the different levels of coverage to you in detail.

Because homeowners includes so much more property and widens the range of damages that they cover it will almost always be more expensive than renters.