Co-Op Insurance and Condo Insurance: What’s the Difference?

Dec 8, 2021 | Personal Insurance

What are the important and critical details you need to know before you pick the best Condo Insurance for you?

Do you already own a condominium or a cooperative apartment, or are you looking to get one?

Insurance for condos and co-ops is very different and a lot more complicated in comparison to homeowner insurance. Lately, a lot of people invest or buy a condo without knowing the full involvement of their duties. You may encounter a line of annoyance because they have no idea of how their insurance for the condo works. Co-op is a whole different story and has its own known issues, just like the condos. You can totally avoid these common problems and save a little dollar along the way. You have to simply understand how your coop or condo insurance works. Furthermore, you also have to know how it connects to the policy of the association. What are your duties and responsibilities, if ever you have a claim?

Do you need insurance for your Condo?

Every coop and/or condo owner should have their own corresponding insurance. One of the most common problems that owners will encounter is when they are purchasing a condo or coop. Another one is when insurance confuses them. Unlike the simpler discussion for homeowners, you don’t have to provide an insurance binder (contracts of temporary insurance, awaiting the formal policy) to the company they are paying their mortgage. Since the building has insurance as a whole, condo/coop owners need not provide a binder. But this is where the condo/coop owners thought they are part of the coverage. So, they forgot to purchase their individual insurance policy. 

Below are a few steps that we need to take to get you through the insurance basics of being an owner of a condo or coop. Included are tips that can help you navigate through what coverages you might need. So, you don’t get any surprise or worse extra expenses.

Insurance Policies You Need

If you are a proud owner of a condo or coop, you will need at least 2 base insurances to cover your home investments for your own unit and as well your personal belongings.

  1. Your personal insurance
  2. The condo association, the co-op board, and/or the homeowner association manages and controls the Main Policy.

Your Own Condo Policy should cover the following.

  1. Personal liability
  2. Personal Property
  3. Improvements, Betterments, Alteration, and/or Additions.
  4. Loss Assessment

In addition to these basic policies, condo/coop, and all other residential insurance policies should contain a lot of clauses that would show the limits of each coverage to each high-value item. There are a lot more that you might want to review when it comes to home insurance. And, also what item should you insure. 

What are the Common Claims for Condo Insurances?

If you need to file a claim that includes your condo/coop, you will not just deal with one insurance policy. A condo owner will depend on two of the building’s main (master) policy and their personal policy to claim. There will be a time, that another unit owner or a third-party claim will get involved and will file negligence on your part. They will claim that it is your fault and responsibility. If this is the case, their insurance will be part of your plate. The two or three parties will then decide on what is the best way of action they will take. They will need to find the actual loss and who will be responsible for covering it before they file and settle the claim.

A usual kind of claim for condos and coops if there are several insurance policies you have to pay is water damage claims

Relying on the coverage of the Master Policy, you can encounter gaps in the coverage itself. 

Things That You Need to Know About Condo Insurances:

We will help you understand all the critical information about coop/condo insurance. So, you might need to file a claim. You know what you can expect and how to get the best offer claim for your settlement.

  1. Unit Assessment Coverage and Shared Areas for Condo Insurance owners
  2. What do you need to ask your condo association regarding the Home Owner Insurance?
  3. Bare Walls in VS All in coverages
  4. What are the risks not part of condos and coop policies?
  5. Not reading the HOA or Condo Association policies will and can cost you hundreds of thousands.

What’s the difference between Home Insurance, Condo Insurance, and Coop Insurance?

Condo and Coop Insurance might seem the same to regular living spaces, but they are far from being the same, both in the financial aspect and legalities. Due to these legalities, condo insurance and coop insurance are applied differently in many ways.

 How to get the best insurance for your Condo or Coop?

For you to comprehend the difference between the two insurance policies, you need to understand the difference between coops and condos and how the type of homeowner differs from the typical single-family homeowner and their needs.

Coop: A breakdown

Owned by a corporation, Coops or Co-ops means that as the primary owner of the house or unit, you technically do not own the property or even the building. What you only own, is a shareholding of a corporation. Small Coops can only have a maximum of three owners, unlike larger co-ops which can have hundreds of shareholders. In the chance of loss, your ownership share will come in handy. Coops are like multi-unit apartment buildings. 

Remember that coop buildings have only one owner, the corporation is all his tenants. The way that they can own a unit is by buying shares in the building, but they literally do not own the walls or any specific part of the building. The management of the coop is supposed to be taken care of by all the members of the community. The actual building is a common property of all the shareholders and can be unevenly divided depending on the number of shares each of the shareholders bought or purchased.

Condominium: Break Down:

The purchaser owns the condominium unit. The owner of the condo possesses the whole unit, including the walls of everything inside their unit. Condo owners are officially property owners of their own units. The building consists of all the individual available units, plus communal facilities like pools and lobby. A Master Insurance Policy or MIP is responsible for making sure that the condo structure has insurance as a whole, including the communal areas, and then the individual unit owners are responsible for making sure that their personal property and room features also have insurance.

Difference between Co-op Insurance and Condo Insurance VS Home Insurance:

The big difference between standard home insurance and the 2 is the dwelling coverage. And literally the owner of the building or the infrastructure. 

What is the Responsibility of the Condo / Coop Owners?

Owner’s Responsibility and Condo Insurance

Under the circumstance that you own a condo and the owners of the building need to make sure that the building has insurance meanwhile you are responsible from the walls towards whatever is inside your private dwelling. 

Owner’s Responsibility and Coop Insurance?

Coop home dwellers do not own their unit, they are only responsible for a certain percentage of the building depending on how many stocks (share hold) they purchased. Meaning, that the insurance they require for their personal property is only as a tenant policy. This Tenant Insurance will be under your name, while the building will be under the corporation’s name. 

Home Owner’s Insurance

You are the only owner of the building and whatever is inside of it, so it is your sole responsibility to insure them all.

CONDO INSURANCE: Shared Areas and Unit Assessment Coverage

What are Shared Areas and Unit or Loss Assessment in Condos?

One difficult thing to comprehend with coops and condos is how to file a claim and how it plays out especially considering that there are shared or communal areas in a condo building. Here are a few items that you can take a look at so to help you understand the coverage of the policy.

  1. What is a Shared Area? – these are the areas in the building that doesn’t connect to your unit. Ike hallways, garden, pool, gyms, and elevators.
  2. Condo Owners are liable for these communal areas. A portion of a medical cost or damage cost will be part of the coverage as long as the accident or incident happens in this specific area in the building.
  3. Is Loss Assessment Important? – This will help you secure your personal property if an accident happens, this will, of course, cover your expenses especially if the damage and issues are related to the building where your condo is.

More information…

  1. Coverage of the Master Policy and The Assessment of the unit after a claim – if the HOA or the Mater policy covers a loss, but unfortunately the damage is bigger than the coverage available for you to claim in your HOA, the members of the home owner’s association and the owner of the individual unit can be liable for their shared portion of the aid damage.
  2. A Higher Deductible for the Master Policy for a Condo Association or HOA. – Provided that the Master Policy of a commercial building is really high, it can at times range from $10,000 – higher. If there is an incident that the deductible has to cover for something, the amount will be divided to all the unit owner through a method of assessment on who gets higher. 
  3. What’s Loss Assessment Insurance Limit – Each type of policy has its own limits for loss assessment coverage. It is critical for you to understand what are these limits for assessments due to your personal deductible.

Kinds of Damages that the HOA (Home Owner’s Association) Insurance Covers VS Condo Insurance:

HOA and Master Policy Coverage:

The basic coverages are of course part of the master policy, but there are different varying conditions for this policy. 

  • Check if there are damages to the building
  • Check if there are damages on the Communal Areas
  • Identify if there are injuries that happened on the Shared Areas

Condo Association Insurance, unfortunately, do not cover alteration and or addition like fixtures, appliance, and any other improvement which are inside your personal resident premises. Given that these are personal belongings, you have to get your own policies that include your personal liabilities.

What Are ALL IN and BARE WALL HOA (Home Owner Association) Master Policy?

Different Kinds of Master Policies:

There are 2 available kinds of policies for anyone who takes an interest. They are ALL IN’s and BARE WALLS. 

For you to have insurance and some self-protection, it is critical for you to understand what vital parts of your property (apartments or condo) and of course it is important that you know that the building is part of a master association policy. IS the building inured the walls only or does the inclusion of the fixtures that were part of the initial building layout?  

ALL IN Insurance

The insurance will cover the original state of the building, from walls, ceilings, floor, and all other fixtures that came along and were originally built.

As an owner or a condominium, you need to make sure you insure any addition and alteration you made against the initial structure. Such as a new floor or any additional fixtures like cabinets, bathrooms, or plumbing items. Policies can cover the alteration from a previous owner, but you must understand that, so u can be made aware of it. Some lucky condo owners were able to find newly renovated apartments or condos and you can just assume that’s covered by the Master Policy, but it is always better to ask and check.

BARE WALLS Insurance

Literally, as the name says, it includes only bare walls, ceilings, and floors. It will not include any fixtures like bathrooms and/or kitchen counters. You will have to insure them separately as a part of your personal insurance policy.

Helping you Make a Sound Decision.

It is of course critical to read through the condo or association rules or your coop lease of proprietary. You need to ask for the Master Policy to make sure you know how much insurance do you require if there is any alteration or addition that you are planning to take.

Once you know what are the parts covered on the HOA, you can contact us or any of your insurance brokers to help you find a suitable policy for you and your plans.

Major Risks Not Covered by Most Condo Policies:

Damages Caused by Water May Not Be Covered by Your Master Policy:

Water Damage Claims is one of the biggest insurance risks for your condo/coop property If you are purchasing a condo or coop, it’s critical to get comprehensive coverage to make sure you and your house are covered from water damages. The common problem of living in a condo is that if your neighbor is careless when it comes to this kind of policy Remember that if they are using a washing machine and it breaks down, or they forgot their faucet, or if any of their pipe breaks, you literally have no control of the damage that it can impact your personal space In this event your personal policy will help you Never just rely on the Master Policy of the building when it comes to water damage. You have to make sure to have your personal coverage for any personal property, alteration, or addition. 

Loss Assessment is NOT Special Assessment

For example, there was an earthquake and your building is damaged. The building owners can or may impose a special assessment to all the owners of units to share in repairs and cover the cost of damage. Thinking you have a loss assessment that might cover this for you, is totally wrong. Check if your personal condo policy includes earthquake insurance, if you don’t have that, then your policy will not cover your portion of the share. 

 If you’re looking for the best insurance agent in Denver, CO (or anywhere in the United States) who is familiar with the products and local area please consider reviewing Advantage Insurance Solutions. We can find the best value policies and tailor your coverage to your specific needs. Call now! We won’t disappoint!