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Property Insurance

As a  Realtor in Ocean City I am often asked about property insurance and thought it would be helpful to put together an article outlining the basics.  Insurance requirements will vary and the cost, type and amount of coverage you will need will ultimately be dictated by the location and type of property you purchase.

If you are buying an Ocean City property that is part of a condominium association your primary insurance coverage will be included in the condo fee that you see noted on each listing. The condo association has a master insurance policy in place to cover fire, flood, hazard and general liability insurance. The only insurance that your typically required to have in this situation is contents insurance, also known as an HO6 Policy. The HO6 policy covers the interior of the unit, your personal belongings, furniture and any improvements that you make to the property.

To illustrate how this would work, lets use a worse case scenario that a hurricane comes through and levels the building that you are an owner in (not likely!). The master insurance policy covered in the condo fee would rebuild the building to its original form and your content insurance would cover the replacement of the interior of the unit, your furniture, personal items and any improvements that you made to the property.

Contents insurance is relatively inexpensive. As a very general rule you can estimate $15-$20 per month for each bedroom that the unit has. If the unit has a lot of upgrades or more square footage than the average unit it will be on the higher end. Conversely, content insurance for bay side non-waterfront property is going to be less expensive than insurance for direct oceanfront property. Content insurance is typically obtained from the company that has the master insurance policy in place for the building. It is the least expensive option and in the event there is a problem you will only be dealing with one insurance company as opposed to several.

If you are buying a single family home or a townhome/condo that is not part of a home owners association you will be responsible for obtaining your own insurance. I typically recommend contacting your primary insurance provider first to see if they provide coverage in Ocean City. They will likely be able to give you the best rate based off of a multiple policy discount. Don't be alarmed if they won't provide the coverage as a lot of insurance companies will not insure properties in coastal communities.  If that is the case you will need to reach out to a local Ocean City insurance company that specializes in coastal property insurance.

The amount of coverage you will need will largely be dictated by your lender if you will be financing your Ocean City real estate purchase. Needless to say we are surrounded by water so flood insurance will be required in a majority of instances, sometimes in places that you wouldn't expect. I would be glad to check into any property for you to see if flood insurance is required and what the current owners are paying. Even if you are paying cash for your purchase you will want to have adequate insurance in place to protect your investment and ensure that it can be rebuilt in the event there is a problem.

If you intend to rent out your Ocean City real estate you will need a separate policy in place as your standard home owners insurance will not cover incidents with renters. This is known as "rental to others coverage" and relatively inexpensive when purchased as a rider policy with your other coverages. If you intend to rent out several pieces of real estate in Ocean City or have additional liability concerns you may want to look into an umbrella liability coverage policy. This coverage will protect you against additional legal claims in the event that the limits are met on your primary liability coverage. In addition, these policies can provide some flexibility in how you set up multiple properties from an accounting, tax and legal standpoint. As with "rental to others" coverage, these policies are relatively inexpensive and often overlooked when dealing with multiple properties.

I hope that this provided you with a good starting point for property insurance information as it pertains to real estate in Ocean City. Feel free to contact me directly anytime at 443-614-9179 or by email if you would like any additional information regarding real estate in Ocean City.

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