How little is too little ?

Question

Thomas S. · Answer

You should have a minimum 1M liability coverage.

John Mocker · Answer

Ganesh,

In trying to determine what coverage for a rented condo you need to remember that the Association will insure parts of the building but you as owner, have to insure parts also.  The most important document for this is the By-laws.  Specifically, the part that describes your unit in terms of where it begins (ie. does it start at the bare walls or the studs, does it include the windows, doors, etc.) and who insures the limited common elements (common elements such as pipes, wires, ducts, etc. that pass though just one unit or several but not all).  The other thing to look for or ask about is who needs to insured the fixtures, cabinets, built in appliances.   On a condo unit owners policy that coverage can be called Improvents & Betterments or Additions & Alterations or Building coverage.  Your state laws may impact what the condo association must cover and that may change what you find out above.

Some other coverage you may need:

- contents:  for the non-permanent appliances, and other property that you provide with the rental

- Loss or Rents:  Make sure you have enough coverage for 12 mos. rental

- Loss Assessment:  Covers assessments made by Assocation to the Unit owner but only for things that are normally covered under your policy (ie. Liability loss that exceeds the associations limit, building loss that exceeds the coverage, etc.)

Lastly, you need to have Liability and medical payments.  I recommend getting the maximum that the policy will provide (for most companies that is $500,000).  You should strongly consider an Umbrella policy which would provide additional liability coverage in increments of $1,000,000.

Dave Van Horn · Answer

The property has to be insured for at least what you have in a mortgage, and it's usually insured higher than that. Your Insurance agent should be able to tell you what's acceptable.

Stanley Parsley · Answer

1.5 % of the purchase price is were you want to be

How little is too little ?

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