You can’t buy a standard homeowners insurance policy if you live in a condo or cooperative apartment (co-op). Because you own the living space, renters insurance isn’t enough, either. When you share a building structure, insurance gets more complicated.
What you need is co-op insurance. Many people buy a condo or co-op before understanding the type of insurance they need or how co-op insurance works. Even if the building has its own insurance coverage, it doesn’t protect what’s inside your unit. You must have an individual policy to cover your place and belongings.
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What Is Cooperative Insurance?
Cooperative (co-op) insurance is insurance for co-op apartment or condo owners. The building itself has insurance coverage for common areas such as hallways, foyer, roof, walkways, gyms, and garden spaces.
However, it does not cover any loss or damage in your individual unit. If you own a co-op, you need your own individual policy to cover the things inside your living space, such as:
Loss or theft of your belongings from a burglary
Smoke or water damage that ruins your walls, floors, or ceilings
Personal liability if someone trips or gets hurt in your apartment
How Is Co-op Insurance Different from Home Insurance?
The primary difference between co-op and homeowners policies is what the policy covers. When you own a house, you own everything inside and outside of the house. Besides your personal possessions, you’re responsible for the entire real estate including the structure of your home, outbuildings, and the land it sits on.
Co-op unit owners are only responsible for the space inside the walls of the apartment or condo. The building where your co-op is located usually has its own insurance policy for walkways, hallways, the roof, and other common spaces.
What Co-op Insurance Covers
Figuring out what co-op insurance does and doesn’t cover can be tricky. Because your living space is inside a building that other co-op owners also share, you need the protection of two separate insurance policies:
Your individual coverage picks up where the master policy ends. An individual policy can cover the replacement cost if your property is lost, stolen, or damaged and personal liability inside your unit.
Understanding Master Policies
The master insurance policy insures the structure and shared areas on the property. Two types exist: “all in” and “bare walls.” Understanding the difference is important and will allow you to purchase enough property insurance through your individual policy.
If the co-op association has an “all in” policy, it usually covers the original structure, walls, floors, ceilings, and fixtures that were in place when the unit was built.
However, the co-op or condo association may opt for “bare walls” coverage only. In that case, the master policy applies to bare walls, ceilings, and floors and doesn’t cover bathroom fixtures, lights, ceiling fans, appliances, and other fixtures inside the unit.
Why You Need an Individual Co-op Insurance Policy
Even if the building has an “all in” policy, it doesn’t extend to your personal belongings or liability coverage. To avoid surprises, co-op owners must contact an insurance company to purchase their own policy.
Read your legal agreement to learn what the master policy covers, and ask the co-op board to find out how much additional coverage you need. Generally, your own co-op insurance will cover:
Contents: Clothing, furniture, and electronics you own
Walls and floors: Improvements, additions, or alterations you made
Personal liability: Bodily injury, such as if a visitor trips over a rug, and damage from a neighbor’s overflowing sink, tub, or toilet
Loss assessment: For shared spaces when the co-op is partially responsible for the cost for deductibles or damage
Additional living expenses: The cost of temporary shelter if you have a temporary loss of use of your apartment or condo
Keep in mind that it doesn’t cover every loss or liability. Insurance companies commonly exclude high-value items. If you own jewelry, fine arts, or heirloom antiques, a rider or umbrella liability insurance can give you added peace of mind.
How Much Does Co-op Insurance Cost?
The price of co-op insurance is usually much less than what you might expect to pay for homeowners insurance. The average annual premium for homeowners insurance was $1,192, according to the National Association of Insurance Commissioners (NAIC). The cost is lower for co-op owners because you’re not insuring the dwelling or structure of the building.
NAIC reports the average cost of co-op insurance is $471 per year. Your premium depends on the amount of coverage you purchase and where you live. The average co-op policy in Wyoming is $340. But if you live in New York City, the average premium is $515.
Co-Op Insurance: The Bottom Line
Investing in your own living space is an exciting time. However, because you’re buying a unit inside another structure, you need to learn about co-op and condo insurance, which can be more difficult to understand. Make sure you’re familiar with the ins and outs of co-op and condo insurance before you purchase a unit. Also, because of differences in the cost of living and replacement values, prepare to spend more if you live in NYC versus Dayton, Ohio.
Examine your insurance needs to know the amount of coverage you should have, and use Insurify to compare policy options and find the best home insurance price for co-op insurance.