Tag Archive for premium

Choosing the right condominium deductible

When I was a kid, they had one kind of potatoe chip. Plain or original no flavors. Now you have to dig for the original. There are like 25 kinds of flavored pringles ( speaking of which, we did not have factory formed chips in the olden days either)

The point here is that people like choices, and people all have different needs and preferences.

What is a deductible?

A: it is that part of the insured loss that you assume ( self insured retention) before the insurance company kicks in and starts paying on your behalf.

So what deductible is right for your association?

$500, $1000, $2500, $5000, $10,000, $25,000 or maybe a percentage?

Things to consider when making your choice:

  1. Other unit owners opinion
  2. Are low level claims, really maintenance issues
  3. What is your risk tolerance?
  4. What can we afford?
  5. Are unit owners covered under their condo homeowners?
  6. Do you have a history of claims? If you do, take a low one, If you never have a claim take a bigger deductible and save the money
  7. Can we pass off the deductible to the unit owners

There are more things that might help you make the decision, but it is mostly about what makes sense money wise, and what your tolerance level is to risk.

If you save 10% on a $20,000 premium to go from $1000 to $5000. It might make sense. If you have a claim a year you lose! If you have a claim every 2 years, you break even, If you do not have any claims, you are saving money and it makes sense to jump up to a bigger deductible.

Weigh your options, and do the best thing for you and the other unit owners.

 

Condominium insurance premiums rising

condo premiumsAre prices on the rise for condominiums? When I pick up my regional issue of Condo media, I see a full page ad from a local insurance agent touting that premiums are rising.

Are they right?

They are to some extent. Right now in 2013. Premiums do seem to be on the rise. Insurance premiums are always in some phase of a cycle. The term insurers use is a soft market ( low competitive pricing ) and a Hard market with ( prices rising ).

So, don’t be surprised if you renewal has an increase. Your options are to accept the increase, ask for other quotes, or reevaluate the importance of some of the coverages, or think about raising your deductibles to stabilize any increases.

Why would an insurer raise rates?

  1. Your individual building has had adverse loss experience.
  2. The company itself has had adverse claims experience
  3. Your exposure has changed
  4. The insurers cost of their insurance has gone up. This is called re-Insurance.
  5. Catastrophe losses like Sandy, floods, tornadoes and wildfires has caused industry wide losses that are in excess of what the insurers would have expected.

The reality is that insurance for property and condominiums have been going down for some time now and condominium insurance buyers have benefited from the lower rates and the increased competition for your business.

Ask your agent or your carrier for an explanation of a rate increase, and if shopping the insurance is a good idea. It just might be that the increase is due to added value in your policy, or an increase in limits to keep with building values and liability exposures. If you can lock in a longer term, now might be a good time to have guaranteed rates.