MONEY TALK So you want the simple life–just four walls and a roof over yourhead. That’s why you’ve moved into an apartment or acondominium. No problems, you say, and there’s insurance on thebuilding–the owner of the apartments or the condominium owners’association has a policy on the building, and you are covered. Maybe so; maybe not. The standard building policy probably coversthe structure and the public or common areas. This coverage means thatif the building burns, your part will be rebuilt, but what is in yourpart will not be replaced. The building policy will cover the liabilityfor a visitor who trips in the lobby, but you may be liable if the guesttrips in your entry hall.
And the building policy may pay to replacethe window the burglar broke–but not the silverware he carried out ofyour dining room. Read the building policy carefully to learn what is covered andwhat is not. Better yet, have a lawyer or an insurance agent read thepolicy.
Then get your own personal insurance to protect what isunprotected. You will probably need liability insurance to cover thecosts–actual and retributive–of mishaps that injure your guests andvisitors. You should have liability coverage of at least $100,000 formedical expenses and other damages that might come from accidents. Ifjuries are generous with damage suits in your area, you might wantliability coverage of $300,000 or more. Catastrophic-coverage policiesmay cover damages in excess of the limits on your other policies. Askabout them. Next, you will need insurance to cover your possessions.
Thestandard policy covers the “actual cash value’ of whatever waslost, stolen or destroyed. This term means the insurance company willgive you what the thing was worth when you last had it–not what youpaid when you bought it or what you will have to pay to replace it.After five years of use and a cigarette burn on one of the cushions,your $2,000 sofa may have a cash value of only $350.
So obtain a policythat will cover the replacement costs of your clothing, furniture andother personal possessions. The preminums for this coverage may runperhaps 40 percent higher than the premiums for a policy that pays onlythe actual cash value of your possessions. Industry estimates say about $25,000 would be needed to replace thepersonal property inside an average two-bedroom apartment. If youconsider the cost of a total loss in your apartment or condominum,you’ll probably pay the higher premiums for replacement-costcoverage and be grateful for the comfort of the protection –but youwill need some proof you owned what you said you owned and paid what yousaid you paid for the lost, stolen or destroyed property. The insurance industry advises that we inventory all we own indetail, and that we support the inventory with receipts, canceled checksor some other evidence of original prices or values.
Next you will need insurance that specifically and particularlycovers items of special and extraordinary value–jewelry, antiques,silverware or stamp or coin collections. Unless these extraordinarypossessions are specifically mentioned and insured in your policy, youwill probably recover only a fraction of their true value. The remedy for the loss of special possessions is to attach”floaters’ to your policy that provide full coverage forindividually identified items. The costs for these floaters are verylow, and they do give the coverage you want for particularly valued andvaluable items. Good documentation–receipts or writtenappraisals–supports any claims you might someday be forced to file. Another cautionary note: If you live in a condominium, read thebuilding policy with special attention to see if it covers cabinets,paneling, built-in appliances and other permanent, paid-for improvementsto the structure.
If the building policy does not cover these items,your own policy should. Your policy should cover whatever the buildingpolicy does not, without gaps or overlaps. So make your agent and yourcompany earn their premiums.
Most of the standard insurance programs written for those whochoose the simple life of apartments or condominiums provide certainadditional coverages as standard features. They will pay for theproperty you damage when you visit neighbors, for property stolen ordestroyed while you are traveling and for your living costs if you haveto leave home after a loss while insurance is paying for repairs andredecorating. All this coverage costs money– premiums, as money iseuphemistically described by the industry. You can lower your premiumsby raising your deductibles.
Most policies will require you, as astandard feature, to pay the first $100–the deductible–on any claim,as a way of eliminating petty claims for every broken dish and gravystain on the carpet. If you decide that insurance is only meant tocover large, catastrophic losses and raise the deductible to $500, youmight save ten percent on premiums. Ask about companies and policies that offer lower premiums topeople who do not smoke or do not drink, who install smoke detectors anddeadbolts or who otherwise act to lower the risks for themselves andtheir insurance companies. Four walls and a roof over your head in an apartment or acondominium may not be quite as simple as it seems, but insurance willcover the risks of the complexities. And you still won’t have tocut the grass.