What type of insurance do I need for a co-op or condo?
When you purchase a co-op or a condominium, you still need to have a homeowner’s insurance policy. The monthly fees that you pay when you have a condominium go into a building insurance policy. If your home is burglarized or damaged in some way, these fees do not cover you’re the contents of the home. It does not cover you for any personal liability either. In order to protect you and your belongings, you need to have your own insurance policy – one that is designed for co-op and condominium owners.
Before you take out a cop-op or condo insurance policy, you should first review the insurance policy of the building. Most of these policies cover hallways, the roof, elevator, lobby, walkways and other common areas that people who live in the building may commonly be found. There may be coverage for sewer backups, floods and earthquakes, and changes in company policy that could affect the personal insurance of those who own condominiums in the building. In some cases, the building’s insurance policy may cover such things as additions or alterations that have been made to the original building, such as new carpeting, but usually this insurance only covers the walls and you have to have insurance on everything else.
A typical co-op or condominium insurance policy should include the following coverage protection:
- Damage caused by fire or lightning
- Wind damage
- Damage caused by the weight of snow or ice on the roof
- Theft
- Glass damage
- Water damage from broken pipes
- Electrical surges
- Smoke damage
- Vandalism
- Explosion
If you live in an area known to have earthquakes, you can also have this included in your policy.
In addition to this coverage, you should also ask about having additional coverage to cover other expenses. If there is a fire in the lobby of the building, for example, the company that owns the condominium may charge you an assessment to cover the cost of the damages. Having a unit assessment clause in your policy will reimburse you for the amount that you are required to pay. If sewer backup is not included in the list of what is covered by the company policy, you should also have this included in your policy. A sewer backup problem in another unit could cause damage to your home and instead of making a claim of damage on your policy, you can take advantage of this clause to reimburse you for the cost of your repairs.
Your lender will require you to have insurance to cover the cost of replacing your personal effects when you take out a mortgage to buy a condo or co-op. Look at the amount that you paid for all your appliances and furniture and the cost of your personal effects, such as jewellery, clothing, bedding and anything else that you have in the condo. If you have the original sales receipts, that makes the job of making an inventory list much easier. If you don’t you can estimate the price you paid for each item. Be sure to have replacement cost of these items included in your policy. If something should happen to destroy your unit and everything in it, without replacement cost, you will only get the market value for each article.
When determining the market value of an article, the insurance company does not look at how much you paid for it. It looks at the age of the article and how much it would cost to buy that particular item now. Usually the price they come up with is far less than you can actually purchase it for and nowhere near what you paid for it new.
Look carefully at your insurance policy for a cop-op or condominium to ensure that you have adequate coverage.
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