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What type of insurance do I need for a co-op or condo?
If you have
purchased a condo or co-op, the bank will require insurance to protect
its investment in your home. 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.
You will need two separate policies to protect your investment:
- Your own insurance policy.
This provides coverage for your personal possessions, structural
improvements to your apartment and additional living expenses if you
are the victim of fire, theft or other disaster listed in your policy.
You also get liability protection.
- 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 apartment, it is important to know which
structural parts of your home are covered by the condo/co-op
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 condo association, insurance professional or family
attorney.
Sometimes the association is responsible for insuring the individual
condo or co-op 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 includes not only improvements
you make, but 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.
Also ask your insurance professional about the following additional
coverages:
- 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 is a fire
in the lobby, all the unit owners are charged the cost of repairing the
loss.
- Water back-up
This insures your property for damage by the back-up of sewers or
drains. Water back-up may not always be included in a policy. Check to
see that it is 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 seperate flood and earthquake policies. Flood insurance is
available through FEMA's National Flood Insurance Program ( http://www.floodsmart.gov/floodsmart/pages/index.jsp
). Both flood and earthquake insurance can be purchased through your
insurance agent.
- 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 purchasing insurance, it is important to find an agent or company
that specializes in condominiums or co-ops. Also don’t forget 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 at 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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