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