Unlike a homeowner’s insurance policy, condominium (and renters) insurance policies are designed to cover your personal property and liability, not the physical structure you live in.
The coverage difference is due to a key aspect of insurance, which says you must have a financial interest in something in order to benefit financially from a loss.
Simply put, as a condo owner, you do not own the building you live in. Therefore an insurance company would not pay you in the event the building was damaged. It would be like buying a car insurance policy for your neighbor’s car.
You can’t be sure you are purchasing the correct type of condo unit owners insurance policy until you know what type of policy the condo association has in place to insure the building you reside in. The condo association will already have a Master Policy in place, and it will dictate what property you are responsible for insuring.
What is a Master Policy?
The Master Policy is the condo association’s policy. It will detail exactly where the condo association’s coverage ends and where yours should begin. It is absolutely necessary for you to understand this before you purchase coverage.
You will see one of the following policy types:
1. “Bare Walls” – This type of master policy DOES NOT include coverage for anything inside of, or attached to, the physical walls of the condo. With a bare wall Master Policy, you are responsible for everything other than the walls and the building. This means you would need coverage for damage to any appliances, carpet, plumbing, wiring, interior (and possible exterior) fixtures and cabinets.
2. “Single Entity” – This type of Master Policy is more comprehensive than the bare wall option. The condo association’s policy will not only cover the building and walls, but also the carpet, appliances and cabinets. Of course, you’re still responsible for your personal property.
Tip: There are some insurers whose condo policy will automatically “adjust” to whatever the Master Policy requires. However, you would still need to know which you have, as this will help you purchase the right amount of coverage.
Again, it is important you know exactly what type of Master Policy is in place prior to choosing which type of condo insurance policy you need to purchase. Failing to do your research and “taking a guess” could cost you a lot of money in the event of a property damage claim.
What Does the Condo Unit Owners Policy Cover?
There are a couple of major coverage types available for the condo unit owner’s policy. They mostly mimic the homeowner’s insurance policy, again, with the exception of coverage for the actual building itself.
Personal Property – This is your “stuff.” You need to carefully evaluate the replacement cost of everything you own in order to choose the correct coverage limit for this section of the policy. This is also where you would need to consider if you are responsible for appliances, cabinets, carpet and fixtures. You will certainly want to have limits high enough to replace or repair your personal property as well as any additional items not covered by your association’s Master Policy.
Personal Liability – Liability coverage would be triggered in the event you are sued for negligence that results in bodily injury or property damage to others. A Master Policy will not contain coverage for your negligent acts. For example, if someone slipped-and-fell in your unit, you could be sued in order for that individual to collect damages. Experts recommend you purchase at least $300,000 in personal liability coverage.
Medical Payments – This is a no-fault type of medical coverage that would pay a small benefit to an individual who was injured on your property. There are no lawsuits involved here and the policy limits for this type of incident rarely exceed $10,000.
Loss Of Use – This coverage is designed to pay for your additional expenses in the event you are not able to occupy your unit due to a covered loss. For example, you might have to stay in a hotel for an extended period of time if your unit was destroyed by a fire. The limits for this coverage may be expressed as a dollar or time limit. You might have a policy that offers up to $20,000 in coverage or one that may provide 12 months worth of expenses.
There can be a number of additional coverage possibilities available beyond the basics listed above, so speak to your insurance agent or insurer to determine what your options are.
Tip: You should always obtain coverage for water back-up. It is not necessarily included on these types of policies. If your property is damaged by water from a backed up sewer or drain, you would have no coverage without this endorsement.
Something to Consider
Not all policies are created equal. Simply reviewing the coverage limits and overall cost of a policy may not be enough to ensure your policy is adequate to properly insure you.
You must also seriously consider the types of perils you’re property is insured against. After all, having the highest coverage limits at the cheapest price doesn’t mean squat if your claim is denied because you weren’t insured against a certain event that damaged your property.
The difference lies in whether or not you have a “named perils” or “all perils” coverage form.
Put simply, you want the all perils policy. This type of policy will cover damage to your property that results from “any direct physical damage that is not specifically excluded.” Basically, you are insured against any possible reason for damage, rather than just a few perils the insurer will cover.
The named perils option doesn’t have any exclusions because it doesn’t need them. If the damage to your property is not caused by an insured peril, it’s simply not covered.
This post was written on November 28, 2011
Insurance can be one of the biggest expenses in our monthly budgets. Unfortunately, this doesn’t seem to stop insurers from tacking on fees when they sell us policies.
While some are impossible to dodge, you may have more of a say than you think.
Let’s look at the top five most common fees added to insurance policies and determine whether or not they can be avoided.
1. Policy Fee
You would think the policy fee would simply be part of the overall insurance premium you pay. Unfortunately, this is not the case.
The reason this fee is separate relates to how insurers must perform their accounting. Without going into too much detail, your policy “premium” is tracked separately from the policy “fee” based on requirements from insurance regulators.
For the record, not every insurer chooses to charge a policy fee.
Tip: Use a calculator rather than your emotions when it comes to policy fees. If the premium with a policy fee is cheaper than the one without, go with the cheaper overall policy – assuming the coverage is comparable!
This fee is not negotiable, as it is “filed” and approved with your State Department of Insurance.
2. Broker/Agency Fee
Insurance sales people can be referred to as agents or brokers depending on which state you live in. In some states, a broker’s only form of compensation may be their “broker fee.” Fair enough, right?
On the flip side, some insurance agents may charge an “agency” or “broker” fee ON TOP of the commission they are paid by the insurance company that issued the policy.
While this is not an illegal practice, you may be getting gouged. Your best bet is to ask questions if you see this type of fee. Get it in writing if you are told it’s a mandatory charge. You can also contact other agents in the area and ask if they charge the fee.
Buy insurance from the agent that DOESN’T charge the fee – if the coverage is comparable!
3. Inspection Fee
This fee is most common with a homeowner’s insurance policy. Let’s face it. Home insurers need to verify the home they are insuring is everything you said it was when applying for coverage.
The inspection fee is what the insurer charges to recoup their costs of paying someone to go to the property and make sure everything adds up.
Not every insurer inspects every home, but you should expect an inspection to take place when you purchase a new policy.
Unfavorable inspection results may lead to a policy cancellation or a non-renewal of coverage.
4. Installment Fees
Insurers prefer to have policies paid in full at inception. Doing so often results in a discount to your overall premium. Paid-in-full policies cost the insurer less money than those that are paid over time. No stamps, no potential missed payments…you see where we’re going here.
Installment fees are designed to help insurers recoup the costs associated with not paying your policy in full on day one. In addition to the possible additional costs mentioned above, insurers spend millions of dollars each year on postage alone just to send us our bills or to maintain computer software that processes our electronic payments.
Most insurers are going to charge you between $2 and $15 dollars to spread your premium payments over the entire term of the policy. Typically, your installment fee will be on the lower end if you signed up for electronic funds transfer. Billing by mail costs the insurer more, so it will cost you more.
Be sure to include the installment fee in your overall insurance expense when shopping your premiums if you don’t plan to pay in full.
5. Late Fee
Not only are we charged for spreading out our payments, but we may also incur late fees when we don’t get our premium payments to the insurer on time. The dreaded non-sufficient funds fee fits into this category.
Put simply, pay on time, every time, and if you are set up on an electronic funds transfer, make sure the money is “there” when your insurance company pings your account to get it.
Bonus Fee
Yes, we recognize that is an oxymoron. The words “bonus” and “fee” should not be in the same sentence. However, if your policy cancels for non-payment of premium, you may have the opportunity to reinstate your coverage with no lapse…for a small fee!
If you are fortunate enough to be within the reinstatement period (too much time hasn’t gone by since your policy cancelled), you will likely have to pay this fee. Expect to shell out about $25 for this one. You’ll also have to sign a statement of no-loss before you’re on your way.
This might sound ridiculous, but you are better off having a policy with no lapse in coverage when your next policy term starts. Insurers usually charge a hefty amount of additional premium to those of us that let our coverage expire.
Read more: 10 ways to lower your car insurance premium.
This post was written on November 23, 2011
Finally! A television ad campaign from State Farm that actually talks about one of their insurance products, as opposed to simply showing Lebron James dancing in a parking structure.
But wait, it gets better. The new insurance-centric ad focuses on one specific product, State Farm’s renters insurance program.
In fact, they specifically tout the ability to get you a policy for as little as $4 per month if you bundle auto insurance with them as well.
Insurance for only $4 per month!? While it may sound too good to be true, it is very possible because renters insurance doesn’t tend to cost all that much regardless of where you purchase it.
So, is this a good deal or not?
Depends on the Coverage…
Let’s face it. We’re all out for the best deal we can get when it comes to our insurance expenses. And best typically means cheapest.
However, it’s more important to ensure the coverage is adequate. Not only do you need enough coverage to replace or repair your personal property, you also need to be covered against the right perils (this is equally important).
What do we mean? Well, you could have $50,000 worth of coverage for your personal property, but if your “stuff” is damaged by a sewer or drain back-up and you don’t specifically have coverage against that type of loss, you’re simply out of luck. Claim denied!
So be sure to verify with your State Farm insurance agent exactly what is, and more importantly, isn’t covered by their renter’s insurance policy. After all, $4 per month is pretty darn cheap!
If it’s a named perils policy rather than an all perils policy, you should probably move on. Again, if things like water back-up aren’t covered, you may want to opt for a different insurer who offers more comprehensive coverage.
Should I Bundle Auto and Renters Insurance with State Farm?
Good question. Only if it makes sense financially. A $4 monthly renter’s insurance policy may not be worth your time if you have to purchase a more expensive auto insurance policy in order to qualify for it.
In other words, if you’re overpaying $100 a month for their auto insurance coverage simply to get a cheap renters insurance policy, you may want to go back to the drawing board.
Do the math and shop around to find the best of both worlds. You may have to pay $10 or $20 a month for a quality renters insurance policy, but if your car insurance is $50 or $100 less a month, you win.
Just be sure to do your homework! And consider using an independent insurance agent, one who can shop all lines of insurance, including auto, home, renters, and so forth with multiple carriers all at once.
Tip: Depending on who you rent from, renters insurance may be required as part of your lease agreement (Is renters insurance required?).
This post was written on November 17, 2011
Personal injury protection can be an important additional auto insurance coverage. In fact, some states consider this coverage so important that it’s mandatory. This means your car insurance policy HAS to have it and you HAVE to pay for it. In Texas, while PIP is technically mandatory, you can reject the coverage, in writing, as part of your application.
In some states, this mandatory coverage results in substantial insurance fraud costs, which are simply transferred directly to the consumer. Case in point: Michigan has the highest auto insurance premiums in the country. Why? They have mandatory unlimited PIP limits on every policy. Someone gets injured in a vehicle and can collect as much money as they want. Ouch!
What’s Going On in Florida?
According to the Miami Herald, “the state [FL] leads the nation in staged car accidents and questionable claims.”
As a result, a new coalition named Gear Up Florida has started a crusade to reduce this “epidemic” or insurance fraud. Their main goal is to get the Florida PIP laws changed to make it more difficult to take advantage of the system, which is bleeding citizens dry by causing insurance rate increases.
How the Scam Works
Unscrupulous individuals stage car accidents in which several of their passengers suffer “soft tissue” bodily injury. This type of injury is tough to dispute, as there are no broken bones, and no visual proof of “actual” injury.
Basically, the perpetrators say they are hurt and in pain. Then they seek medical help from “pain clinics,” some of which are more than happy to bill an insurer for $10,000 worth of medical care…per individual! Another gray area medical service is massage therapy.
Some of the most brazen fraudsters (who got caught) have been captured by parking lot video cameras, which recorded the staged accidents taking place.
After such accidents, these individuals call a group of friends, who show up at the scene and claim to have been injured. Let’s say six people claim to have soft tissue injuries. That’s a $60,000 payout by the insurer.
Proposed Changes to the Law
The Gear Up Florida coalition is not seeking to end PIP coverage in Florida, but rather wants the following steps taken to curb the rampant fraud.
1. Give Insurers More Time – Insurers have a specific amount of time to process and pay out these types of insurance claims. State laws seek to make sure insurers aren’t dragging their feet for those who are really injured. It is thought that insurers can limit the fraud by taking more time to investigate the claims more thoroughly.
2. Limiting Attorney Fees – Attorneys can rake in big bucks by getting involved in the claims process. The idea here is if attorneys can’t make as much money dealing with PIP claims, they will be less aggressive in their pursuits of higher payouts.
3. Pain Clinic Oversight – Many pain clinics are a godsend to those who really need them to manage legitimate pain. However, there is so much easy money involved here that some pain clinics are engaging in the fraud by continuing to offer “medical” services to those who don’t need them…for a fee, of course. This includes other “alternative” medical treatment facilities.
Ultimately, there are a few bad apples out there that are costing the rest of us millions of extra insurance premium dollars on a yearly basis.
It is imperative that the loopholes get closed here and only those who need legitimate medical services benefit from this type of auto insurance coverage.
Tip: 10 ways to lower your car insurance costs.
(photo: ChazWags)
This post was written on November 15, 2011
A certain unnamed TTAI staff member recently went in for their “free” annual physical. Many health insurers offer this as a preventative measure against major medical problems that may go undiscovered without routine screenings. Sounds simple enough…right? Wrong.
You probably already know that most doctor visits aren’t free, but just how much you’ll be on the hook for seems to be a mystery until the final bill arrives.
If you’ve been to your doctor recently, you likely heard the phrase, “we will bill your insurer and send you a bill for whatever they don’t cover.”
It can be a little disconcerting to think about the “surprise” bill you’ll get in the mail in the next few weeks.
But what if there was a magical way to determine exactly how much your bill will be? Enter the Aetna Payment Estimator.
What is the Aetna Payment Estimator?
NaviNet, the nation’s largest real-time healthcare communications network, has created a piece of computer software called the “Aetna Payment Estimator” that estimates the cost of services for doctors and their patients.
Simply put, the software automatically tallies the costs of medical services performed in real-time by using the member’s benefits plan details and provider fee schedules to provide an estimate of their financial responsibility.
The amount that isn’t covered is your out-of-pocket expense for the visit.
The simplest example would be calculating the cost of your copay, deductible and coinsurance and subtracting it from the cost of your overall visit. Anyone with private (non-employer sponsored) healthcare insurance knows this isn’t necessarily that easy!
(Can I get health insurance without a job?)
The Benefits
1. No surprises – this is the biggie. You can get an accurate estimate of a future bill today. Being prepared for a costly medical bill is helpful in more ways than we can count, not least of which is peace of mind.
2. Lower bills – You may opt to forego certain medical tests if you know they are not covered prior to having them performed. Anyone who has received a large surprise bill would likely agree they could have skipped a few of the “services” that ended up costing much more than they expected.
3. Better planning – Knowing just how much is due and when will help you set aside the necessary funds so you can pay the bill in full, as opposed to opting for a payment plan that costs you more.
Any Downside?
We’re glad you asked. First, if Aetna is not your healthcare provider, you can expect to do things the old-fashioned way, which means increased stress levels after your visit while you wait for your bill to arrive.
However, Aetna’s Payment Estimator is no perfect angel either. It relies on you selecting the proper procedures and services, and hoping they match up with those which your doctor uses.
If different codes are used, your estimate may be way off. The estimate could also be “unsuccessful” if the submitted procedure requires review, or if the provider does not participate with Aetna or the patient’s network.
Another potential drawback is that Aetna’s Payment Estimator provides real time estimates. This means your estimate may be “off” if you have visited multiple healthcare providers within a certain time frame.
There is no way (currently) for the program to differentiate between what you owe for “today’s” visit and “last week’s” visit. You will only see the grand total for all “claims” being processed at any given time. So your estimate will show the total amount due for all current charges.
Final Word
While this seems like a great idea, at the end of the day it’s just an “estimator.” In other words, expect prices to vary, and for arguments to ensue.
It’s certainly not a strong reason to stay with or switch to Aetna, but it is an added frill to increase transparency in the often overly complicated medical industry.
And it’s not necessarily always a great idea to make health decisions based on cost, especially if they’re pressing issues. Perhaps having a better health insurance plan is the way to go.
Take the time to compare health insurance quotes online and/or visit an independent agent to ensure you get the best deal for your health coverage needs.
Read more: Top 10 health insurance companies.
(photo: colinmford)
This post was written on November 14, 2011
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