Insurance for a townhomes or condo condo. Do you need it?

Do you need renters insurance for your town home or condo?

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WHAT IT IS

When you own a condo or town home, your monthly association dues provides you basically with “walls out” coverage. If the home is damaged or destroyed, the associations insurance policy will rebuild the property.  Anything inside, or “walls in” is NOT covered.

HO6 POLICY

The walls in policy for town homes or condo’s is officially known as an HO6 policy, but think of it as being similar to a renters policy, as is covers everything inside. The main areas covered in a policy are:
Personal property coverage covers your belongings so that you can replace your items in the event of a loss, such as fire, theft, vandalism, etc. Your association’s policy covers the structure of the building, but it does not extend to cover your own property.

Loss of use coverage covers additional living expenses if you have to move out temporarily while your unit is being repaired. This coverage covers the additional costs you would incur by moving to temporary housing, renting a hotel room, or commuting a longer distance to work while your home was being repaired.

Personal liability coverage covers damage the policyholder or his dependents cause to a third party.

WHY YOU SHOULD HAVE IT
Many people don’t think they have much, but the cost to replace everything you own adds up quickly. On average, for around $15 per month, you can get an HO6 insurance policy so that your property can be replaced. Plus, most insurance carriers will offer you a package discount for having both car and and homeowners insurance, so the protection becomes even more affordable.

See how little great protections costs by calling our friends at Reliable Insurance Network at 651-675-4911


Why you need renters insurance

Why you need renters insurance?

Everyone hates paying for insurance… but be it car insurance, health insurance, home owners insurance, life insurance,  or renters insurance.  You are sure happy you have it when you need it.

Renters tend to be younger and make less money than homeowners, and they don’t always think about the need for renters insurance.

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Many people focus simply on their contents, thinking they don’t have that much stuff. If all this stuff disappeared tomorrow,  they could easily replace it.  But there’s more to renters insurance than protecting your belongings. Here’s what you should think about when you consider a renters policy.

Fire, smoke, and water damage are usually the other events that we think of when we talk about renter’s insurance. But be sure to ask your agent what is and is not included in your coverage. It is important to note that the tenant is NEVER covered under the property owner’s policy.

What does Renter’s Insurance Cover?

You will be protected if your apartment burns down, or the upstairs tenants water heater leaks and drains into you unit, or if you are robbed of those expensive gadgets that you possess. Many policies cover medical expenses if someone is hurt inside your property and liability insurance can help protect your assets too. If the loss forces you to move out of the unit, the coverage includes increased living expenses. If you live in a flood plain, flooding will not be covered.

How much coverage do I need?

This will be determined by the value of the things that you have. If you have a lot of expensive things, (jewelry, electronics, furnishing) you can expect to have a larger policy. The cost will vary in proportion to the coverage. Be sure to ask about the limitation of the policy. Many policies limit the amount of coverage on electronics and assets used for working at home may require separate coverage.

What does Renter’s Insurance cost?

On average, most people spend about $150 a year, depending on the amount covered, and where you live. If you have expensive things, your costs will be higher. High risk areas can boost the premium as well. If you are considering whether or not to get insurance, remember that a fire caused by a smoker who falls asleep with a burning cigarette next door could cost you everything but the cloths on your back.

Three underserved groups – Are you one of these?

There are three groups that seem to be lacking insurance coverage.

College student – Fresh off to school, not really thinking about losing their belongings, college students are finding that theft, vandalism, and fire can quickly take away their possessions.

Elderly – This group may have been long time home owners but the loss of a loved one has forced them to rent a more affordable home or apartment. The idea of renter’s insurance is being overlooked.

Those transitioning from foreclosure to rental – This group are rather large; many have lost their home to foreclosure and are now renting for the first time in a long time. As homeowners, they probably had homeowners insurance but just haven’t considered getting renter’s insurance.

If you are a renter, consider finding a rental insurance agent near you. The cost really isn’t all that great, and will protect you in the event of a loss. Be sure to ask a lot of questions about the policy; what is included, exceptions and exclusions, and cost all need to be talk about before signing the agreement.


Condo Insurance – What you don’t know can cost you a lot of money

What you MAY NOT know about Condo insurance

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Newer lender regulation REQUIRE people owning a condo and even some town homes to get homeowners insurance. This policy is similar to a “renters insurance policy“, but is actually called an HO6 policy.

If you or one of your clients owns a Condo or a Townhouse, there is an important coverage to consider.

It is called “extended protection”.  this coverage protects the owner for any damages that may occur that the owners association will not pay because the master policy for the association has a deductible of $5,ooo or $10,000.

If for example, the owner grills out on the deck and gets too near the vinyl siding and damages it,  the association will make them fix it but will not pay for repairs until the deductible is reached.  So the owner may be on the hook for that 1st  $5,000 or $10,000.

With extended protection,  insurance will pay the damage up to the deductible.  And the coverage is relatively inexpensive.


New Condo Insurance rules put the squeeze on home buyers

Buying a Condo or Town Home? Better understand the insurance rules.

Minneapolis, MN: Currently on Condominiums and attached Town home units (PUD), Fannie Mae requires insurance coverage of the lesser of 20% of the unit’s appraised value or replacement cost.

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For applications dated on or after January 1, 2012, 100% replacement insurance coverage of the exterior and interior of condominiums, or attached PUD (Town home) units will be required.

If the “master” or “blanket” policy for the condominiums or attached town home development does not provide full coverage of the interior or is a “bare walls” policy, then an individual HO-6 “walls in” insurance policy must be obtained to reach the full 100%  replacement requirement.

The owners HO-6 policy must be sufficient to repair the interior of the unit, including any additions, improvements and betterments to its original condition in the event of a loss. The HO-6 policy is required to cover 100% of the insurable replacement cost of the unit’s interior improvements and betterments, including kitchen cabinets, lighting, flooring and plumbing fixtures. This updated insurance requirement will apply to all products and program types including Conventional Conforming, Non-Conforming, FHA and USDA Rural Development loans.

Recent changes in “Fidelity Bond Coverage” has created huge problems on Condo and Town home financing, and this new insurance requirement is going to add another wall to financing these type of homes.

The only saving grace is that for most people, a walls in HO-6 Condo or Townhome Insurance policy should only run +/- about $160 per year.

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