The Importance of Condo and Co-op Insurance

• December 2nd 2009

by Michele Lerner

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Condo and co-op buyers sometimes mistakenly assume that their monthly fees will cover all their insurance needs. However in most cases, condo owners need to buy coverage for their unit, in addition to the master policy which covers the entire development. That said, coverage for individual units will be lower than the insurance paid on a town home or single-family home because some insurance costs are already wrapped into the condo fee. Below we outline various types of insurance as well as insurance-related issues that you should keep in mind.

Master Policy for Condominiums

The condominium association will have its own insurance policy, which covers the common areas shared between units, such as the roof, the basement, the elevator, the garage/parking lot and sidewalks. This policy will cover any physical damage to these areas and also provide liability coverage in case someone is hurt on the property.

Individual Owner Policies

All condo owners should have insurance to cover personal belongings against fire or theft, and also any structural issues within the unit (see exception below). Insurance should also be obtained to cover living expenses in the event you can’t live in the home because of fire or water damage.

Structural Issues

Sometimes, the condo or co-op association of a building will cover the maintenance of structural elements in each unit as they were originally built, including fixtures. If this is the case, the owners need only obtain insurance coverage for rooms that have been remodeled. If this is not the case, the owner will need to obtain a policy that covers plumbing, wiring, appliances, etc.

The condo or co-op association documents should clearly state what elements are covered by the master policy. If it is unclear, an insurance agent can usually work with you to determine proper coverage.

Extra Coverage

It is important to check the limits on the standard insurance policy that you get in order to see if it will cover the replacement of luxury items like artwork or jewelry. If it doesn’t, you will want to obtain additional coverage.

Flood insurance must also be purchased separately from standard insurance, and it is important to check to see if you have water back-up insurance, which covers your property for damage from a sewer or a drain.

Discounts

Most insurance companies offer discounts to customers that bundle more than one type of insurance (auto, condo, life) insurance with the same company. Also, if you use the same company that your condo association uses for insurance, another discount might be available.

For more information on the types of insurance you will need, go to the Insurance Information Institute.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/the_importance_of_condo_and_co-op_insurance/1567.