Condo Co-Op Insurance

7 questions to ask before buying a condo or co-op insurance policy

SAN MATEO, Calif., May 14, 2008 - While every renter and homeowner needs property insurance, those who own a condominium or co-operative property must purchase an insurance policy specific to this type of property to be sure their buildings -- and their possessions -- are covered, and president Ethan Ewing cautioned that condo or co-op owners should know seven specific things before choosing insurance.

Each condominium and co-op property has a "master policy," purchased by the owners’ association or co-op board. This policy covers the building structure and common areas, such as lobby, elevators, boiler, basement and roof. Every individual unit owner must purchase an additional, separate insurance policy to cover personal property and provide liability protection.

"To find out exactly what is and is not covered, carefully review your association bylaws or your co-op's proprietary lease," suggested Ewing. "Then, to obtain the right insurance for your condo or co-op unit, follow the guidelines below."

Ewing's checklist includes:

1.Understand the details. Some building insurance policies cover standard fixtures inside each unit (such as cabinets and original carpet). Others exclude improvements and additions to a condo/co-op unit -- new carpet, new cabinets, or a remodeled kitchen or bathroom -- which must be covered by the unit owner's policy. With other policies, unit owners are responsible for covering anything within the unit's walls. Know what you need to cover so you can work with your insurer to build the right policy.

2.Assess your coverage. Look into coverage for unit assessment fees. With this special policy addition, if the building suffers a covered loss, and all unit owners are assessed a portion of the cost, the insurance will cover the fee.

3.Watch for water problems. Many property owners know policies will not cover flood damage without special flood insurance. A more likely cause of water damage for condo/co-op owners, however, is water backup. Ask about a policy that covers damage from sewer or drain malfunction or backup.

4.Mind your business. Those who work from home should be aware that most condo/co-op insurance policies do not cover business activities. Owners generally need a separate policy to protect them from losses related to any business they operate from their home unit.

5.Cash vs. replacement value. Choose a policy that will pay replacement value for damaged or stolen goods -- that is, enough money to be able to replace belongings with new ones. Some policies cover "cash value" or "fair market value" instead, which refers to the money the owner would receive from selling their (used) belongings on the open market. Also, before selecting a policy, calculate the true value of possessions by doing a home inventory (forms and suggestions are widely available on the Web).

6.Go on the record. Photograph inside drawers and cabinets, and take snapshots of electronics and furnishings. Also take photos and keep receipts for any improvements to the unit, such as installing new fixtures or remodeling. Save the documentation in an electronic file that is backed up electronically, or put it on a CD in a safe deposit box. The records will speed payment of claims.

7.Ask for a discount. Most insurance companies give discounts for multiple policies, so check with the agent who issued your auto insurance. On the other hand, the best rate might come from the same company that issues the building or association policy. Check both before selecting a policy.

"Owning a condominium or co-op can be an excellent investment in your future," Ewing said. "Protect that investment with the right insurance, and you can stay on the road to successful unit ownership."

Based in San Mateo, Calif., ( is a free one-stop portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. As the online portal to Freedom Financial Network, LLC, the company has served more than 40,000 customers nationwide since 2002 while managing more than $1 billion in consumer debt. The company blogs about consumer finance issues at /blog.

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