Property Insurance: 3 Things to Expect

Author:  Heather Connor, Crested Butte Lifestyle Agent

Property insurance seems so basic and easy to breeze over.  This common contingency in a contract is something that shouldn’t be overlooked and can be handled with one or two simple phone calls.  You may be thinking – I’m really busy, how important is it?  

When you purchase a property, your lender will usually require that you obtain insurance and any applicable additional policies or riders that may be necessary to protect your and also their investment. (More on what this means below.). If you pay cash, then it’s up to you to obtain insurance or choose to forgo.  However, the insurance contingency in a contract allows you as the buyer to perform proper due diligence and ensure that there aren’t any surprises down the road.  You will find that your scenario will fit into one of three categories below:

1. The property is uninsurable or the premium is astronomical.  This can happen in speciality locations where the insurance company feels that the property is too high of a risk to insure. Some companies may not insure off-grid homes, properties with only one egress to the neighborhood, and other such factors.

2. You may require an additional policy or rider. An example of this would be if the property were to fall into a flood zone.  It surprised many folks to know that there are areas of Gunnison that fall under the flood zone per the FEMA map.  (You can view specifics on the FEMA site but the basic image below gives you good general idea.)

Crested Butte/Gunnison FEMA flood zone Map below.

3. The premium seems reasonable and coverage adequate. (This is obviously ideal and usually the case in the majority of purchases.)

Townhomes, planned communities and condos will all have different requirements as there may be an additional policy already in place. Oftentimes this is referred to as a Master Policy and is included in the cost of your dues. Often these policies cover common/shared areas as well as certain parts of your structure. How much of your property the master policy covers is determined by your owners association. Some choose a very lean policy whereas some others are a little beefier in their coverage. You will want to review the master policy with your insurance company to ensure that you don’t over or under-insure.   

As well, you may find that you want to rent your home during times that you are not utilizing it.  This will be covered in an alternate blog post in regards to short-term rental insurance.  (Keep an eye out for this new blog as it’s a hot topic in our valley.)

In general, every time you purchase property it could potentially become a liability that could be leveraged against the equity in other properties or assets you own. Utilizing proper methods of asset protection as well as insurance are key steps In keeping yourself protected.

At bare minimum, we suggest that you at least gain real estimates on the property, even if you choose to obtain an actual policy at a later time.  This is the time in your purchase contract that you want to be sure that the availability, cost and coverage are what you require to protect yourself and your investment.

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