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 buildings master insurance coverage. It is especially crucial for co-op and condo owners because these tend to be more complicated then homeowner insurance. It is essential to understand the full implications you’re responsible for. Otherwise, you could run into a lot of frustration and surprises when something goes wrong.
We explain the differences between condo and co-op insurance coverage. A good understanding of what it covers means you’ll save money and have fewer problems when a claim made.
Table of Contents
What is a Master Building Insurance Policy?
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 it 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 residence. 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 to be; handled in the event of damage.
Condo Buiding 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. It often confuses condo owners and makes them think that everything is covered.
Condo insurance will cover, at its most basic, the following:
- Personal liability
- Personal property
- Improvements, alterations or additions
Most basic insurance policies have clauses that 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 Building 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 hold 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, a neighbor that you feel was responsible for the damage because of negligence; then, their insurance policy will also come into play.
There are several steps to the process of deciding among the parties involved who are responsible. Protect yourself by reading carefully through the coverage in the master building insurance policy; look for gaps between that and your homeowner’s insurance policy.