Of all the bills homeowners deal with, home insurance is often the trickiest. While protecting what is probably your biggest investment is essential, over-insuring is money down the drain. This conundrum is greater for condo owners. After all, it’s not like they own the basic building structure. So, what do you have to insure? How do you know when you have gone overboard?
“The first thing the condo owner should do is get a copy of the master policy,” informs Liberty Mutual Insurance sales representative Peter Patsio. The master policy is the insurance that covers the whole condominium building. “The home owner needs to know what it covers before they can calculate what they need to insure themselves.”
Master policies will vary from property to property, says Patsio, whose job it is to evaluate how much coverage homeowners need. “I make sure we’re filling all the gaps. Some master policies will cover everything except personal belongings. Those are usually more high-end properties. Others cover very little.”
Typically, a studs in, studs out master policy covers everything outside the wall studs of your condo (basically, everything outside of your home) — and the homeowner is responsible for everything inside the framing, including plasterwork, etc. “People don’t want to waste money double insuring and covering what the master policy includes,” says Patsio. “But, on the other hand, they don’t want to get caught out, should the worst happen.”
Need for a stricter policy
Most mortgage contracts demand that homeowners have adequate home insurance. After all, the lender has to protect its interests. But they are growing more cautious now than ever. “Over the past five or so months, we’ve seen an increase in what mortgage companies are asking borrowers to insure for. More lenders are now asking for at least 20 percent of the appraised value of the home,” says Patsio.