Homeowners Insurance Information

What type of insurance do I need for a co-op or condo?

If you have purchased a co-op or condo, the financing institution will generally require you to procure insurance in order to protect its investment. You may, however, need more insurance to cover your personal items, liability or fees that may be charged to you regarding shared areas of the building like the lobby.

The two separate policies available to protect your investment are:

1. Your own insurance policy.
   This provides coverage for your personal possessions, structural improvements to your dwelling and additional living expenses if you are the victim of fire, theft or other disaster listed in your policy. You may also get liability protection.
2. A "master policy" provided by the condo/co-op board.
   This covers the common areas you share with others in your building like the roof, basement, elevator, boiler and walkways for both liability and physical damage.

To adequately insure your co-op/condo, it is important to know which structural parts of your home are covered by the association and which are not. You can do this by reading your association’s bylaws and/or proprietary lease. If you have questions, talk to your co-op/condo association insurance professional or family attorney.

Sometimes the association is responsible for insuring the individual co-op or condo units, as they were originally built, including standard fixtures. The individual owner, in this case, is only responsible for alterations to the original structure of the apartment, like remodeling the kitchen or bathtub. Sometimes this can include improvements you’ve made, as well as those made by previous owners.

In other situations, the co-op/condo association is responsible only for insuring the bare walls, floor and ceiling. The owner must insure kitchen cabinets, built-in appliances, plumbing, wiring, bathroom fixtures, etc.

Make sure you are informed about additional coverage options that may apply to your co-op/condo purchase by ask your insurance professional about:

1. Unit assessment
   This coverage can reimburse you for your share of an assessment charged to all unit owners as a result of a covered loss. For instance, if there is a fire in the lobby, all the unit owners are charged the cost of repairing the loss.


2. Water backup
   This can insure your property against damage by a sewer or drain. Water back-up may not always be included in a policy. Double check with your agent that this is included.


3. Umbrella Liability
   A generally inexpensive way to get more liability protection and broader coverage than what is included in a standard co-op/condo policy.
4. Flood or earthquake
   If you live in an area prone to these types of disasters, you may need to purchase separate flood and earthquake policies. Flood insurance is available through FEMA's National Flood Insurance Program (http://www.floodsmart.gov/floodsmart/pages/index.jsp). Both private flood and earthquake insurance can be purchased through an authorized insurance agent.
5. Floater or endorsement
   If you own expensive jewelry, furs or collectibles, additional coverage for these items may be available through your homeowners policy, since the average limit for jewelry theft on a standard policy generally falls between $1,000 to $2,000.

When purchasing insurance, it is important to find an agent or company that specializes in condominiums or co-ops. Also remember to ask about all available discounts. You can reduce your rates by raising your deductibles and by installing a smoke and fire alarm system that rings to an outside service. If you insure your unit with the same company that underwrites your building’s insurance policy, you might also get an additional reduction in premiums.

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Information provided with permission from the Insurance Information Institute, Inc.