Why Waste Money on Homeowners Insurance for Your Condo?

Why Waste Money on Homeowners Insurance for Your Condo?

The Truth About Condominium Associations, Homeowners Insurance and You

Choosing not to buy condo insurance can cost you more than you think.

If you live in New York City, Los Angeles or any of the other hundreds of congested urban areas boasting a ridiculously high population to living accommodations ratio you're probably grateful to have been able to find a quality condo for sale at all, much less one available and bearing any price tag lower than an arm, a leg and your first born child. But who are we kidding? Even a "good deal" condo is still easily one of the most expensive purchases you're ever going to make (unless you carry through on your plans for that jumbo jet). That means that condominium homeowners insurance should definitely be considered a part of your standard condominium package.

Yes, before you say it, your condominium association probably does have a homeowners insurance policy for the property already in place. These people have millions tied up in these units. They're not going to run the risk of losing it all as the result of a well placed grease fire. But guess what? It doesn't matter how nice your condo association might be, they're still not going to pay to insure anything they don't have to. That means that their investment in protecting your condominium stops as soon as you reach the hamster sized crawl space inside the exterior walls.

What does that mean for you? It means that you're not going to be protected from (among other things):

· Water damage to your interior walls if your shower pipes decide to flood.

· Legal fees if your neighbor's overly rambunctious child tries to fly down your stairwell, trips over a pair of shoes at the top and needs stitches.

· The replacement cost of your $1800 flatscreen television if some savvy burglar decides it's worth more on the black market than sitting in your apartment.

· The exorbitant cost of having to replace the Persian rug in the main lobby if your not-quite-housebroken-but-going-to-be-before-he-dies pup decides to use it for his own personal sandbox.

· Replacement or repair costs for your drywall, flooring and cabinets after your Cherries Jubilee (en flambé, naturally) gets knocked to the floor and flambés your entire kitchen.

More importantly, how much is your condominium worth? In 2008 the average cost of a condo sat around $350,000 a unit, up dramatically from $229,000 in 2005 and continuing to climb. If that gets destroyed, that's going to be your loss-and really, don't you have something better to do with $350,000 than pay to buy a new condominium because yours burned to the ground and you didn't have homeowners insurance to cover the loss? For a reasonably small monthly investment (the average cost of condominium insurance is less than $1,000 per year) you can protect yourself from having to blow your entire retirement fund on expenses you should never have had to pay in the first place.

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