If your retirement plans include moving to a condo or apartment, don't let your property insurance lapse just because you no longer own a house.
The kids have grown and moved to homes of their own. The old house seems empty and too large for your empty-nest lifestyle. Moving to a condo or apartment may offer the opportunity to relinquish home repairs, lawn care and snow removal - along with property taxes. If you decide to sell your home, don't just cancel your homeowners insurance - switch to a renter's policy to cover your belongings.
Your landlord or condo association has insurance, but only on the building and surrounding property. The contents of the building - your personal contents - don't fall under the provisions of the building insurance. Renters insurance covers loss of your personal property from risks including fire or lightning, windstorm or hail, explosion, smoke, theft or vandalism, the weight of ice or snow, water-damage from home utilities and electrical surges as well as volcanic eruption or vehicles or aircraft crashing into your space. Riot and civil commotion are often covered, although after settling on those damages, you may want to consider relocating.
Like homeowners insurance, flood and earthquake aren't usually covered, so if those catastrophes are inherent to your geography, you'll need a separate policy or rider to cover those losses. Hurricanes usually fall into the windstorm category, although those claims can be contentious as many people learned after Hurricane Katrina.
Make sure you take a look at whether the policy covers actual cash value or replacement cost. Cash value will usually fall short of replacing your property but replacement cost coverage typically costs more. Document your property and its condition with dated photos or video, and consider extra coverage or a rider if you have particularly valuable possessions like jewelry, antiques or electronics whose value exceeds the policy cap.
You'll need coverage for additional living expenses should you be unable to live in your apartment or condo because of fire or water damage. Most insurance companies limit this coverage to 30 or 40 percent of the total policy value and 12 months after you're displaced.
Your renters policy can protect you from loss for personal or property damage when you're at fault. For example, if a person in your apartment slips and falls or your waterbed springs a leak and damages the floor, renters insurance will protect you from liability and cover the damages. Some insurance companies exclude liability coverage for certain breeds of dogs, such as Rottweilers, pit bulls or Dobermans, however, your rental or condo agreement may make that a moot point by prohibiting those same breeds.
Many of the same variables that affect homeowners insurance premiums apply to renters insurance as well. The bigger your deductible, the lower your premium. Your location and your needs beyond the basics will also play a part. Discounts may be available for having devices like smoke and fire detectors, burglar alarms and fire extinguishers; for policyholders older than 55 and retired; and for purchase of other types of coverage, such as auto insurance.
Just because your status changes from homeowner to condo owner or renter doesn't mean you have less to lose. Renters insurance still has a place in your total risk management plan.
Lawrence D. Sprung, CFP of Mitlin Financial Inc., is a Registered Representative with Securities America, Inc., a Registered Broker/Dealer, member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc., a SEC Registered Investment Advisory firm. Lawrence D. Sprung, Investment Advisor Representative. Mitlin Financial Inc. and Securities America are unaffiliated. He can be reached at (631) 465-2017 or by e-mail at firstname.lastname@example.org. Feel free to forward any questions, or future topics you would like to see discussed to email@example.com and put longisland.com in the subject line.