Having insurance is vital for every homeowner, but a surprising number of people don’t understand what their insurance covers. Or, more specifically, what is covered by apartment insurance and what is included by building insurance. This is especially important for co-op and condo owners because these tend to be much more complicated then homeowner insurance. It’s crucial that you understand the full implications of what you’re responsible for. Otherwise, you could run into a lot of frustration and surprises when something goes wrong.

Here we explain the differences between condo and co-op insurance. A good understanding of what it covers means you’ll save money and have fewer problems when al claim is made.

Most condo and co-op buyers are so caught up in the buying process that they fail to read the fine print on what is covered by the building insurance. You should find out about this before you buy because they can vary significantly from one property to another. In a nutshell, your private apartment insurance covers everything within the four walls of your apartment. Building insurance covers everything that happens outside of them. Don’t make the mistake of thinking that the building insurance will cover damage to your apartment. Get a separate policy for your apartment.

What the master building policy covers will be stated in your proprietary lease or agreement with the building. So make sure to read through it carefully. Understand what is covered, what is not covered, and how claims are handled in the event of damage.

Condo insurance

Unlike homeowners, co-op and condo owners do not need to provide a binder of insurance when applying for a mortgage because the building itself is insured on the association policy. This often confuses condo owners and makes them think that everything is covered.
Condo insurance will cover, at its most basic, the following:

  • Your personal liability
  • Your personal property
  • Your improvements, alterations or additions

Most basic insurance policies have clauses which limit coverage on certain high-value items.  If you have any high-value items such as jewelry, artwork or other limited items, you might want to get a sperate policy to cover them. Your insurance representative will take you through the range of insurance options and recommend what works best for you.

Co-op insurance

Although condos and co-ops might seem quite similar to living spaces, they are very different legally and financially. Because of these legal differences, the way they are insured varies. Unlike condos, co-op owners do not own the actual property. They get the right to live there via purchasing shares in the building. What this means is that they do not own the walls or an individual part of the building. Because of this, the insurance they need is more like a tenant policy.

The master building insurance will cover the building as a whole, which includes any common areas or shared areas. It’s up to the co-op owner to have their liability, and specific unit features covered.

Making a claim

When it comes to making a claim, there will be a few hurdles to overcome in deciding who is paying as you won’t be dealing with just one insurance company or policy. Every co-op and condo owner will have to deal with both the master building insurance and their policy when making a claim. If a third party is involved, such as a neighbor which you feel was responsible for the damage because of negligence, then their policy will also come into play.

There are often several steps to the process of deciding among the parties involved who is responsible. You can best protect yourself by reading carefully through what’s covered in the master building insurance and look for gaps between that and your policy.


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