COOP & CONDO INSURANCE

Insurance can be complex and new property owners are often rushed and stressed, trying to figure out what they need to get to be able to close the deal. When I was putting together my board package, and even though it was required to close on my unit, my insurance policy was the last thing on my mind. In fact, it was the last thing I did in the package. But trust me, insurance for your apartment is not something you should skimp on.

As part of my board package, my coop required I obtain a liability policy with a minimum of $1,000,000 in coverage. I hadn’t had to deal with insurance for a while so I began some basic research and decided it was smart to take out additional coverage for personal contents and loss of use. In fact, it was really a no brainer. When I owned my condo in Tribeca many moons ago, one of the neighbor’s contractors punctured a pipe during renovation and water damaged many of our walls and all of our floors. It was a disaster and we had to move out for an entire summer for the repairs.

When I moved to my new apartment in September, I unfortunately found that my PTAC (through the wall packaged terminal air-conditioning unit) had been leaking while the apartment was being painted and ruined half of the living room floors!! The half that I was converting into Viv’s bedroom. Oh, and it had asbestos underneath it.

MASTER POLICY VS PERSONAL POLICY

First thing’s first. You have to determine what’s covered by your building’s policy and what’s not. You can find this in the building’s governing documents. Condo and co-op owners need their own separate policies in addition to the building’s master policy:

• Your own insurance policy. This provides coverage for your personal possessions, structural improvements to your apartment and additional living expenses if you are the victim of fire, water damage, theft or other disaster listed in your policy.
• The “master policy” provided by the condo or co-op board. This covers the common areas you share with others in your building like the roof, basement, elevator, boiler and walkways for both liability and physical damage. You can read more about your building’s master policy HERE. There are three types and determining which one your building has is important.

For condos and coops, read through your condo declaration and proprietary lease respectively and house rules to determine who is responsible for what. It can vary. For example, your building may only be obligated to give you back a plain concrete box or in another scenario, deliver a basic apartment with kitchen and bathrooms. And typically, any renovation work done in the apartment since it became a co-op or condo, whether by you or a former owner, is almost always going to be your responsibility to insure and replace.

In terms of your own policy, this is generally what you need:

PERSONAL LIABILITY: IF YOU’RE SUED OR AN ACCIDENT HAPPENS IN YOUR APARTMENT

Liability insurance provides coverage for damage caused by you to another unit (perhaps your sink leaked into the apartment below you while your toddler played with water beads) and for injuries sustained inside your apartment (like if your housekeeper trips over your tote on your hallway floor and breaks her ankle.) My building required I have at least an $1,000,000 liability policy. Most buildings do require this and ask for proof of insurance before closing and on an annual basis going forward.

DWELLING: YOUR APARTMENT

If the building was damaged by fire, water, etc., the co-op in most cases is responsible only for the common property. You generally would be responsible for rebuilding from the exterior walls in, including fixtures, plumbing, electric, appliances, walls, floors, etc.

You have to give some thought as to what a total gut renovation of your apartment down to the studs would cost, and that is about what level you need to avoid paying out of your own pocket. As I mentioned, the master policy will generally pay for the shell of the building and rebuilding the common areas. For post war construction, the general measure is a minimum of $300 a square foot, depending on the quality of construction and materials. Pre war construction with plaster walls, crown molding etc can easily start at $500 a square foot and up.

So for a 1,000 square foot apartment, your coverage should be at the very least $300,000.

CONTENTS/PERSONAL PROPERTY: YOUR STUFF

Think about if you had to replace every single thing in your apartment. Clothes, shoes, coats, furniture, specialty fabrics, electronics, lighting, toys, tableware, wallpaper, window treatments, art, jewelry etc. Yikes.

A rough guide for people in NYC making more than $250K per year, for every 1,000 square feet you have fully furnished, $200,000 in contents is prudent.

Note: It’s usually more cost effective to insure your art and jewelry separately but ask your broker or representative directly. A Banksy print my husband bought 17 years ago recently sold at Christie’s for about 5 times more than we thought it was even worth today. Needless to say, we insured it right away under a separate policy.

LOSS ASSESSMENT: FOR THE REST OF THE BUILDING

Loss assessment is protection you can use on claims involving the building or its common areas. Most buildings have insurance that covers incidents outside of your personal unit, however these claims can easily exceed the master policy limits.

For example, if a hurricane causes $700,000 damage to the exterior of the building and the master policy has a $500,000 property damage limit, unit owners likely will be assessed for the remaining $200,000. If you’re in a 25-unit building, that’s $8,000 you need to come up with. In most cases, loss assessment coverage will cover that cost for you.

LOSS OF USE/ADDITIONAL LIVING EXPENSES (ALE): A SHORT TERM RENTAL OR HOTEL

If your home is damaged by a covered loss, loss of use coverage can help pay for your additional housing and living expenses while your home is being repaired or rebuilt.

MY LESSON LEARNED

What I learned from my own personal experience, with insurance, you get what you pay for! You will pay more for better coverage and it’s worth it for both the peace of mind and if disaster strikes, which has happened to me, twice!