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

Dec 13, 2022 | Personal Insurance

What are the essential 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 much more complicated than homeowner insurance. Lately, many 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 how their condo insurance works. Co-op is a different story with its own known issues, just like the condos. You can avoid these common problems and save a few dollars. You have to understand how your coop or condo insurance works. Furthermore, you must know how it connects to the association’s policy. What are your duties and responsibilities if you ever 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 owners will encounter is purchasing a condo or coop. Another one is when insurance confuses them. Unlike the more straightforward 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, condo/coop owners need not provide a binder. But this is where the condo/coop owners thought they were part of the coverage. So, they forgot to purchase their individual insurance policy. 

Below are a few steps we need to take to get you through the insurance basics of owning a condo or coop. Included are tips that can help you navigate through what coverages you might need. So, you don’t get any surprises 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 your personal belongings.

  1. Your personal insurance
  2. The condo association, the co-op board, and the homeowner association manage and control 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 Insurance?

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 when another unit owner or a third-party claim will get involved and file negligence on your part. They will claim that it is your fault and responsibility. If so, their insurance will be part of your plate. The two or three parties will then decide on their best action. 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 a water damage claim. 

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 coop/condo insurance information. 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 must you ask your condo association about 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 as regular living spaces, but they are far from being the same, both financially and legally. Due to these legalities, condo insurance and coop insurance are applied differently in many ways.

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

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 you technically do not own the property or building as the primary owner of the house or unit. 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 its tenants. They can own a unit by buying shares in the building, but they do not own the walls or any specific part of the building. The coop management is supposed to be taken care of by all the community members. The actual building is a common property of all the shareholders and can be unevenly divided depending on the number of shares each shareholder bought or purchased.

Condominium: Break Down:

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

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

The difference between standard home insurance and the 2 is the dwelling coverage. And 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, you are responsible for 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. The insurance they require for their personal property is only 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 building owner and whatever is inside, so your sole responsibility is to insure them all.

CONDO INSURANCE: Shared Areas and Unit Assessment Coverage

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

One tricky 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 look at to help you understand the coverage of the policy.

  1. What is a Shared Area? – these areas in the building don’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 or damage cost will be part of the coverage if the accident or incident happens in this area in the building.
  3. Is Loss Assessment Important? This will help you secure your personal property if an accident happens. This will cover your expenses, primarily 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 more considerable 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 high, it can sometimes range from $10,000 – higher. If there is an incident that the deductible has to cover for something, the amount will be divided among all the unit owners through a method of assessment on who gets higher. 
  3. What’s Loss Assessment Insurance LimitEach type of policy has its limits for loss assessment coverage. You must understand 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 in the Communal Areas
  • Identify if there are injuries that happened in the Shared Areas

Unfortunately, Condo Association Insurance does not cover alteration and or addition like fixtures, appliances, and any other improvements inside your private resident premises. Given that these are personal belongings, you must get policies that include your personal liabilities.

What Are the 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 and BARE WALLS. 

To have insurance and some self-protection, you must understand what vital parts of your property (apartments or condos) are. Of course, you must 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 initially built.

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

BARE WALLS Insurance

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 must insure them separately as a part of your personal insurance policy.

Helping you Make a Sound Decision.

It is 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 you require if there is any alteration or addition you plan to take.

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

Significant Risks Not Covered by Most Condo Policies:

Your Master Policy May Not cover Damages Caused by Water:

Water Damage Claims are one of the most significant insurance risks for your condo/coop property If you are purchasing a condo or coop, it’s critical to get comprehensive coverage to ensure you and your house are covered from water damage. The common problem of living in a condo is that 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 pipes break, you have no control of the damage that it can impact your personal space In this event your personal policy will help you Never 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 a Special Assessment

For example, there was an earthquake and your building is damaged. The building owners can or may impose a special assessment on 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 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. 

Our Last Say

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