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Condo insurance and bankruptcy

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Latest post Tue, Mar 22 2016 5:29 PM by karen2222. 11 replies.
  • Tue, Mar 22 2016 10:19 AM

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    Condo insurance and bankruptcy

    I have condo insurance but try to keep costs down. It's in a senior citizen community, not worth a lot of money, but that's not the point. Maybe it's worth $50,000 tops. It's a nice community. My question is this: what happens if there is a fire and the cabinets, etc., have to be replaced and the place is not easy to sell and my insurance $ won't cover the expenses? Insurance company told me that they cover everything from the walls and floor on out, I'm not really sure how this works, and I am over 65 but wonder if I just "let the place go," because there is a fire or disaster like water leaking damaging things big time, don't pay taxes, maintenance, how will this impact my credit and/or savings?

  • Tue, Mar 22 2016 10:44 AM In reply to

    Re: Condo insurance and bankruptcy

    Standing:
    what happens if there is a fire and the cabinets, etc., have to be replaced and the place is not easy to sell and my insurance $ won't cover the expenses?

    While I can reasonably assume some of the expenses you're referring to and what all you're including in "etc.," there's no way to know everything that you have in mind here.  It's also not reasonably possible to try and predict all of the things that might happen in a hypothetical situation.  Is there any reason why you think your insurance company might not cover damages resulting from a hypothetical fire?  And why exactly are you inquiring about a fire (as opposed to any other potential loss event)?

     

    Standing:
    Insurance company told me that they cover everything from the walls and floor on out

    Whose insurance company told you this?  Yours?  Or the HOA's insurance company?  Assuming you have a standard condo owner's policy, the coverage is exactly the opposite of what you described:  the interior walls and inward (plus some level of personal property protection and liability coverage and a few other miscellaneous things).  Everything outward from the interior walls should be covered by the HOA's coverage.

     

    Standing:
    I am over 65 but wonder if I just "let the place go," because there is a fire or disaster like water leaking damaging things big time, don't pay taxes, maintenance, how will this impact my credit and/or savings?

    Again, I'm not sure what exactly you're contemplating.  If a fire or other loss event renders your condo unhabitable and your insurance denies your claim, then it will be up to you to pay for repairs.  If you don't, you will probably get sued by your HOA, and your mortgage lender (assuming you have a mortgage and that "let the place go" includes stopping your mortgage payments) probably will foreclose.  I assume it's pretty obvious that those things will have a huge negative impact on your credit.

  • Tue, Mar 22 2016 10:51 AM In reply to

    Re: Condo insurance and bankruptcy

    Standing:
    Insurance company told me that they cover everything from the walls and floor on out

    I think you must have misunderstood that.  Unit owner condo insurance normally covers everything from the walls and floors on IN (in other words, everything that belongs to you).

    Have you made sure to obtain your own copy of your policy documents, and read everything carefully (asking for help, ideally from someone you trust, in understanding any parts that you find confusing)?  Ultimately, what counts is what it says in writing in your policy, not what some insurance agent or customer service representative tells you on the phone.

    When you receive your policy declarations in the mail, there will be a place where it tells you which other documents are also part of your policy (this will normally be a list of form numbers).  If you don't already have all those forms in your important document files, you should request copies be sent to you (or you might be able to download them from the website if you have a login on the insurance company's website).

    Since you will need to know exactly what your policy says right after your home burns down, it would be smart to keep a copy somewhere safe.  That can be in a safety-deposit box, or in a self-storage unit if you have one anyway, or in pdf form on your best friend's computer, or whatever works best for you.

  • Tue, Mar 22 2016 10:59 AM In reply to

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    Re: Condo insurance and bankruptcy

    I am referring to a fire as an example only. I want to keep expenses down. I was speaking to insurance company yesterday since rates have risen and she explained to me that the policy insures only the stuff attached to walls, including sinks, cabinets, tile on floors, and ... so forth. Personal items like furniture, I haven't bought anything new in many years. It's all junk. But when Wilma the hurricane, came and went some years ago, those whose apartments were devastated had quite an expense, often up to $100,000 of repairs. They also had to live outside their apartments while they were being fixed. Took months. I can't afford that and don't want to pay that much insurance anyway. But I want some insurance. Now I"m wondering why I need insurance at all. But honestly, we only have about $50,000 in the bank. We have worked hard to save that and don't want to lose it all because something may happen to the apartment as in leaks, fire, etc. Even fire from a neighbor's apartment, and the fire dept. comes and waters down everything, maybe the NEIGHBORS don't have insurance -- who knows? (Whatever other things may happen. I'm only dreaming up possible scenarios to understand situation about what happens IF I don't have enough money to fix place up and I have to abandon property because I can't live there.) So I don't have enough money to fix it let's say, but I do have $50,000 in the bank. I have a small income, social security plus a small retirement amount. My insurance, let's say, is only up to $50,000 but let's say the expenses are $100,000 and I don't have the money to pay for all that. PLUS I might not be able to stay there while it's being fixed. I need to ask so I can settle my mind about these things.

  • Tue, Mar 22 2016 11:00 AM In reply to

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    Re: Condo insurance and bankruptcy

    Yes, I meant from walls on in, I said out because I was thinking from wall to the inside of apartment. Thanks.

  • Tue, Mar 22 2016 11:05 AM In reply to

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    Re: Condo insurance and bankruptcy

    I think I have policy on my email account, I'll double check. I suppose that is good. We don't have safe deposit box. Thanks again. I have paper documents, and the insurance went up over $100 this year although we had no expenses. Then the rep tells me that's because the insurance dept. of Florida allows that when the companies pay out more from the pool. Hard to believe, but that's the way it works. She said I can call Florida insurance board to check it out.

  • Tue, Mar 22 2016 11:14 AM In reply to

    Re: Condo insurance and bankruptcy

    Standing:
    if I just "let the place go," because there is a fire or disaster like water leaking damaging things big time, don't pay taxes, maintenance, how will this impact my credit and/or savings?

    Even though you do have your own insurance, it is possible that the insurance company will delay paying out on your claim long enough to cause you some problems along the lines you describe.  Sad but true.  Sometimes they suspect insurance fraud, and insist on completing a thorough (and time consuming) investigation.  Sometimes they are just slow for unknown reasons.

    So if you are fortunate enough to have savings, you can feel safe knowing that you will be able to pay for repairs out of your own pocket and then submit the bills to the insurance company for reimbursement, and nothing terrible will happen to you because you have to wait a few months to receive your money from the insurance company.  If you DON'T have enough savings to at least pay for the minimum repairs needed to keep the condition from worsening, stay in good standing with the condo association, and cover the cost of living elsewhere for a while, you should think about how you might handle that (where you could borrow money from).

  • Tue, Mar 22 2016 11:16 AM In reply to

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    Re: Condo insurance and bankruptcy

    OK, here's the thing: We have no mortgage. What I"m asking is this: IF there is a situation that renders the place unhabitable, I know from previous news in Florida sometimes the residents had to keep paying maintenance fees. At this point, I just think it would be less strain on me mentally to get rid of the place and go into a rental senior residence. But anything can happen there, too. For instance, a senior housing development was bought out by an up-and-coming realtor and all the senior low-income people were told they had to get out. So I know anything can happen. But I'm beginning to think that the condo is just too much pressure for us. And so was wondering about what happens if...

  • Tue, Mar 22 2016 11:36 AM In reply to

    Re: Condo insurance and bankruptcy

    Standing:
    the insurance went up over $100 this year although we had no expenses. Then the rep tells me that's because the insurance dept. of Florida allows that when the companies pay out more from the pool. Hard to believe, but that's the way it works. She said I can call Florida insurance board to check it out.

    Yeah, I went through something similar in Arizona a few years ago.  There was a lot of storm damage in other parts of the state, so even though my house was fine my premium went up a lot.  It did go down again over the next couple of years.

  • Tue, Mar 22 2016 1:28 PM In reply to

    Re: Condo insurance and bankruptcy

    I suggest that you (1) read your insurance policy, and (2) google something like "what does condo insurance cover."

  • Tue, Mar 22 2016 1:30 PM In reply to

    Re: Condo insurance and bankruptcy

    Standing:
    What I"m asking is this:

    Despite this preface, you ended up not actually asking a question, so I'm not sure what you want to know beyond what you previously asked.

  • Tue, Mar 22 2016 5:29 PM In reply to

    Re: Condo insurance and bankruptcy

    Standing:
    My insurance, let's say, is only up to $50,000 but let's say the expenses are $100,000 and I don't have the money to pay for all that. PLUS I might not be able to stay there while it's being fixed.

    These are problems for which the best solution almost certainly lies in choosing the right insurance, so unless you hate living in your condo and are ready for a change anyway, instead of selling your condo I recommend doing some comparison shopping for insurance policies, looking for the combination of features and cost that best meets your needs.


    First of all, know that there are actual-cash-value policies and there are replacement-cost policies. I chose replacement cost, which is what the best financial advice columnists also recommend. Yes, the premium is higher, but you are guaranteed to receive enough money to rebuild your home.

    Second, reimbursement for living expenses while your home is being rebuilt is a commonly-available option with homeowner's insurance. Typically it's time limited (to, say, no more than 6 months), and it does come with some increase in your premium. You decide whether it's worth it to you; if you have family or friends who will probably take you in at little or no cost, maybe you don't need this coverage.

    Third, homeowner's insurance virtually always comes with coverage for your personal effects such as furniture. It's usually set at a percentage of the main coverage limit (two common options you can choose from are 60% or 75%). Certain types of items (typically very expensive things like fine art and fine jewelry) may be excluded and require coverage under a separate rider; read the fine print of your policy to see what it says about that.

    If you are unhappy with how high your premium is after you select replacement value and living expenses coverage, ask what your premiums would be if you increased your deductible. Raising a $100 deductible to $500 or even $1000 can have a significant effect on your premiums.

    One final thought: an increase of, say, $120 a year in your insurance cost is really not much money when you think about it. It works out to $10 a month, or $2.31 a week, or $0.33 a day. Yes, it's always annoying when you have to pay more money for the same thing, but uprooting yourself from a life you like just because of that doesn't seem like the best choice.

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