Condo and Co-op Insurance 101
By Malds Menzon Jr
Special to USInsurance.com
Some people neglect to consider insurance when they purchase a condo or a
co-oop. But the reality is, much like with homeowners
insurance, these plans are necessary to protect your personal belongings.
There is building insurance, however,
this only covers damages to the common areas of a building such as the roof,
elevator, hallways and the lobby. Personal properties found within the
home unit are not covered by this policy so it is necessary to get a separate insurance policy to cover
your items. For example, if there is a burglary or a fire, damage or loss within
the unit (past the exterior walls) your unit will not be covered by the
building's insurance policy.
To minimize the cost of your condo or co-op insurance
policy you first need to determine what your building insurance policy
covers such as:
Bare Walls Policy - Considered the least expensive plan that
only covers the basic structure of a room. So This will not cover your personal
properties and internal fixtures like the sink, cabinets and the flooring.
Single Entity Policy - This policy covers everything within
the condo except personal property and improvements made by the unit owners.
All-Inclusive Policy - The “all in” policy covers everything
except personal property.
The type of condo or co-op insurance policy you need to look for should
depend on which one of these three your building uses. This way you don’t end up
paying double premiums.
A basic condo or co-op insurance will cover:
Personal Property - A condo or co-op insurance policy will
cover your personal property. If anything is destroyed in an accident or stolen,
the insurer will either reimburse their cash value (cost minus depreciation) or
current replacement cost (how much it will cost today to replace the same item).
Structure and Fixtures - If your association's insurance
policy does not cover the unit’s fixtures (bare walls) then you can have them
insured when you get a separate condo or co-op insurance policy.
Lose of Use - This will cover expenses like the fees for
an apartment
rental while the damaged or destroyed unit is under repair.
Accidents and Liabilities - If an accident occurs and a
guest is injured, a condo or co-op policy will pay for the medical expenses of
the guest. Also, if you or a family member is sued for injuring another or
damaging their property, the insurer will cover the cost. All accidents have to
occur within the unit.
There are a couple of optional benefits as well that may be acquired by
paying a little more.
Replacement or Cash - The insured can opt to be paid either
the cash value of the destroyed or damaged item or the current replacement cost.
All or Named Peril - A typical insurance policy that is
considered “named peril” will provide a list of instances that it will cover.
This is an exclusive list and anything not found in it will not be covered. So
if it states that it will cover fire and flood only, a plane crashing into your
unit will not allow you to recover from the policy. An “all peril” policy on the
other hand will cover every possible risk.
Floater - Insurance
policies normally set a ceiling for the coverage they provide. For an
additional premium you can have an item fully covered. So if you have very
expensive items then you can pay an additional amount for full coverage of the
value.
Remember that the premium will scale with the additional options that you
choose as well as the value of the deductible that you are willing to pay. So if
some of the above mentioned plans are already covered by the association’s
insurance you should negotiate a condo or co-op policy that does not cover the
same thing. This way you can reduce the cost of the premiums that you will be
paying.
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