So you want the simple life–just four walls and a roof over your
head. That’s why you’ve moved into an apartment or a
condominium. No problems, you say, and there’s insurance on the
building–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 covers
the structure and the public or common areas. This coverage means that
if the building burns, your part will be rebuilt, but what is in your
part will not be replaced. The building policy will cover the liability
for a visitor who trips in the lobby, but you may be liable if the guest
trips in your entry hall. And the building policy may pay to replace
the window the burglar broke–but not the silverware he carried out of
your dining room.
Read the building policy carefully to learn what is covered and
what is not. Better yet, have a lawyer or an insurance agent read the
policy. Then get your own personal insurance to protect what is
You will probably need liability insurance to cover the
costs–actual and retributive–of mishaps that injure your guests and
visitors. You should have liability coverage of at least $100,000 for
medical expenses and other damages that might come from accidents. If
juries are generous with damage suits in your area, you might want
liability coverage of $300,000 or more. Catastrophic-coverage policies
may cover damages in excess of the limits on your other policies. Ask
Next, you will need insurance to cover your possessions. The
standard policy covers the “actual cash value’ of whatever was
lost, stolen or destroyed. This term means the insurance company will
give you what the thing was worth when you last had it–not what you
paid 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 policy
that will cover the replacement costs of your clothing, furniture and
other personal possessions. The preminums for this coverage may run
perhaps 40 percent higher than the premiums for a policy that pays only
the actual cash value of your possessions.
Industry estimates say about $25,000 would be needed to replace the
personal property inside an average two-bedroom apartment. If you
consider the cost of a total loss in your apartment or condominum,
you’ll probably pay the higher premiums for replacement-cost
coverage and be grateful for the comfort of the protection –but you
will need some proof you owned what you said you owned and paid what you
said you paid for the lost, stolen or destroyed property.
The insurance industry advises that we inventory all we own in
detail, and that we support the inventory with receipts, canceled checks
or some other evidence of original prices or values.
Next you will need insurance that specifically and particularly
covers items of special and extraordinary value–jewelry, antiques,
silverware or stamp or coin collections. Unless these extraordinary
possessions are specifically mentioned and insured in your policy, you
will 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 for
individually identified items. The costs for these floaters are very
low, and they do give the coverage you want for particularly valued and
valuable items. Good documentation–receipts or written
appraisals–supports any claims you might someday be forced to file.
Another cautionary note: If you live in a condominium, read the
building policy with special attention to see if it covers cabinets,
paneling, built-in appliances and other permanent, paid-for improvements
to the structure. If the building policy does not cover these items,
your own policy should. Your policy should cover whatever the building
policy does not, without gaps or overlaps. So make your agent and your
company earn their premiums.
Most of the standard insurance programs written for those who
choose the simple life of apartments or condominiums provide certain
additional coverages as standard features. They will pay for the
property you damage when you visit neighbors, for property stolen or
destroyed while you are traveling and for your living costs if you have
to leave home after a loss while insurance is paying for repairs and
All this coverage costs money– premiums, as money is
euphemistically described by the industry. You can lower your premiums
by raising your deductibles. Most policies will require you, as a
standard feature, to pay the first $100–the deductible–on any claim,
as a way of eliminating petty claims for every broken dish and gravy
stain on the carpet. If you decide that insurance is only meant to
cover large, catastrophic losses and raise the deductible to $500, you
might save ten percent on premiums.
Ask about companies and policies that offer lower premiums to
people who do not smoke or do not drink, who install smoke detectors and
deadbolts or who otherwise act to lower the risks for themselves and
their insurance companies.
Four walls and a roof over your head in an apartment or a
condominium may not be quite as simple as it seems, but insurance will
cover the risks of the complexities. And you still won’t have to
cut the grass.