The Real.Est List
The ultimate co-op and condo insurance checklist
These days, most co-ops, condos, and mortgage lenders require buyers and owners to get property insurance.
Before shopping around for the best coverage at the best price, you need to find out what’s covered by your building’s policy and what’s not. You also need to brush up on the minimum requirements of your building as well as your mortgage bank if you have one.
Here’s what to you need to know before you buy:
1. Find out what, exactly, your building’s master insurance policy will cover
Generally speaking, co-op and condo owners are responsible for everything from the ‘walls in’ and ‘concrete floors up,’ but each building’s master insurance policy can vary somewhat. In the event of a devastating fire, for instance, your building may only be obligated to give you back a plain concrete box to build upon; in other buildings, you are entitled to a very rudimentary apartment with basic kitchen and bathrooms.
As a general rule, any renovation work done in the apartment since it became a co-op or condo is almost always going to be your responsibility to insure and replace. Figure on $200-300 per square foot to replace a total loss, or more for a very high-end job.
2. Find out whether your building requires a minimum level of liability insurance
In addition to providing liability coverage for damage inflicted by you to another apartment (for example, your bath tub or sink overflows and ruins your downstairs neighbor’s new floors), your insurance policy covers you for injuries sustained inside your apartment, like when your part-time housekeeper slips and breaks a leg on your wet bathroom floor.
It’s a good idea to have it regardless of whether your building demands it. However, many buildings set out minimum coverage levels ranging from $300,000 all the way up to $5 million.
(Note: Most polices don’t cover you for anything that happens when you sublet your place or rent it out in other ways, such as through AirBnB.com. So if you intend to do either, ask. Also, if you have an employee that works for you 40 hours or more per week, New York State requires that you buy workers compensation and statutory disability insurance.)
3. Is your storage area is covered?
First, examine your storage agreement to see what losses are covered and ask your managing agent about what’s provided by the building’s master insurance policy.
Then ask your insurance agent what your new policy covers. Most take care of off-premises damage caused by fire, water damage from burst pipes, and vandalism. So that means if the drycleaners catches fire and destroys half your wardrobe, or your storage locker floods from a burst pipe, you may be covered.
If your personal property is stolen outside your apartment, that may also be covered. Or you may be required to take out an endorsement to cover theft losses outside your apartment. The cost typically charged annually for off-premises theft insurance is probably worth it if you travel a lot with expensive suits or ride a $3,000 bicycle.
4. Ask your mortgage bank whether it has minimum insurance requirements.
Most banks require that your insurance on your walls, floors and built-ins be at least 20% of your mortgage amount.
5. Take an inventory of your possessions and estimate what it will cost you to replace them
Most policies cover the bulk of your personal property—clothing, furniture, artwork, electronics--with limits on jewelry, fur and silverware. You can buy additional coverage for these restricted classes.
Computer equipment is typically also included. However, it may not be if you work primarily from home. Additional coverage is usually available for business equipment you own.
6. Document your property with digital photos...
...and remember to photograph the items you have in storage, as people tend to forget what’s there.
7. If you’re renovating, be sure to notify your insurance agent
Most insurers require that you notify them when you renovate and submit proof of general liability and workers comp insurance by your general contractor. If you don’t and something happens, you may be penalized with a higher deductible if you file a claim.
8. Ask if you qualify for any discounts
There may be lower rates available if your building is fire resistant, if you have a doorman, if you're retired or work from home and are home most of the time, or if you have an alarm system (though many buildings won’t allow them because of the nuisance of factor of false alarms).
9. Temporary accommodations
Apartment insurance does provide you with Loss of Use/Additional Living Expense coverage. If you are forced out of your apartment by a covered loss, usually fire or extensive water damage, you will be reimbursed for the cost of staying in a hotel or renting a temporary apartment until your residence is repaired. Coverage can be provided under either a time limit or a maximum dollar limit. Some companies do not cap the coverage.
Jeff Schneider is the president of Gotham Brokerage Co., Inc., an insurance brokerage serving NYC and the tri-state area for over 45 years.
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