Empty Nesters: Tips For Downsizing Your Home

You've waited patiently, 18, 25, maybe even 30 years, and it's finally happened--all of your kids are out of the house. Now that you've had some time to enjoy your freedom, you may have discovered that all of those extra bedrooms make your home feel a little empty, and you're thinking about moving. Whether you're moving to a smaller house, a condo, or an apartment, your home insurance needs are going to change.

When size matters

If you've chosen to buy another single-family home, you'll be looking at the same type of homeowners policy as you have now. However, you're likely to see a change in your premium (i.e., the amount you pay). That is because the amount of protection you choose is based in part on your home's value, which in turn affects your premium.

Life in a condo

Moving from a house to a condominium can be a big adjustment. When you buy a condo, it typically means that you own your individual unit and a percentage of the common areas. Review (or have an attorney review) the condo documents before you purchase your condo. These documents include:

• Bylaws
• Rules and regulations
• Master deed
• Master insurance policy
• Financial statements

Don't just browse through these documents. Read them carefully, because they'll answer important questions like:

• Where does my sole ownership end (i.e., bare walls or studs in)?
• What is covered under the master insurance policy? (You may need loss assessment coverage to pick up the shortfalls of the master policy.)
• How large is the operating budget?
• How large are the financial reserves?
• How are trustees elected?

Show the master insurance policy to your insurance agent to get the right amount of coverage. You're likely to find that your condo insurance is less expensive than your homeowners insurance. That is because you're no longer paying to insure an entire building. Now, you're paying only to insure your unit.

Renting has its advantages

As a renter, you'll enjoy greater freedom than you did as a homeowner. If you sign a typical one-year lease, you're responsible for paying rent (and not causing damage) and your landlord is responsible for maintaining the building. So if something breaks (e.g., plumbing, windows, appliances), you call your landlord, and hopefully the problem will get fixed in a short amount of time, costing you nothing.

You'll even get a break on your insurance. That's right--even as a renter, you should still consider buying insurance. Although your landlord typically has insurance to cover the physical structure, it won't cover your personal property or protect you against liability claims. To get these coverages, you need to buy a renters policy. And fortunately, since you don't have to insure the building, your premiums should be quite manageable.

Get a move on

Hiring movers can make your moving experience more pleasant, but it can be very expensive. Still, when compared to the cost of doing it yourself (time and pain), it may be worthwhile. Whether you hire movers or do it yourself, consider buying moving insurance. Different plans are available, so talk to your moving company or truck rental company for more information.