Condo and Co-op Insurance

If you own a condo or co-op, you’ll be dealing with two policies. The homeowners association or co-op board will have a master policy that covers the common areas such as roof, basement, elevator, boiler, and walkways for both liability and physical damage. The other policy (HO-6) that you are responsible for getting covers your personal possessions, structural improvements to your apartment, and additional living expenses. It also covers you for fire, theft, and other disasters listed in your policy, as well as liability protection. To insure your apartment adequately, it is important to know which structural parts of your home are covered by the condo/co-op association and which aren’t. You can find this out by reading your association’s bylaws and/or proprietary lease. If you have questions, talk to your association or board as well as to an insurance professional. Some associations insure the individual condo or co-op units as they were originally built, including standard fixtures. In this case, the owner is responsible only for alterations to the original structure of the apartment, like remodeling the kitchen or bathtub. Sometimes this includes not only improvements you make, but also those made by previous owners.
In other situations, the condo/co-op 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.
Other coverage options you may be able to get depending on area, association, or board are:
Unit assessment. This reimburses you for your share of an assessment charged to all unit owners as a result of a covered loss. For instance, if there were a fire in the lobby, all the unit owners would be charged any costs of repairing the loss. Water backup. This insures your property for damage by the backup of sewers or drains. Water backup may not always be included in a policy. Check to see that it’s included. Umbrella liability. This is an inexpensive way to get more liability protection and broader coverage than is included in a standard condo/co-op policy.
Flood or earthquake. If you live in an area prone to these disasters, you will need to purchase separate flood and earthquake policies. Both flood and earthquake insurance can be purchased through your insurance agent. Flood insurance is covered later in this chapter.
Floater or endorsement. If you own expensive jewelry, furs, or collectibles, you might consider getting additional coverage, since there is generally a $1,000 to $2,000 limit for theft of jewelry on a standard policy.
When you’re buying insurance, it’s important to find an agent or company that specializes in condominiums or co-ops. You can reduce your rates by raising your deductibles and by installing a smoke and fire alarm system that rings at an outside service. Also, don’t forget to check on discounts if you insure your unit with the same company that underwrites your building’s insurance policy. Shop around and get at least three quotes, since costs can vary considerably.