How does insuring a co-op work?
When you buy into a co-op, you normally pay maintenance or association fees. The co-op management board may use a part of those fees to buy a master insurance policy. In general, the master policy typically covers:
- The exterior of the building
- The grounds
- The floors, walls, and ceilings in each unit
- The common areas all residents share, including hallways, pools, tennis courts, clubhouses, etc.
If a windstorm causes a tree to fall and damage your roof and siding, the co-op board's master policy may pay for repairs or replacement needed to fix the damage to the window, wall, floor, and ceiling. But it won't cover the cost to replace your couch, rug, and other personal property. For that, you need condo insurance.
Some master policies also cover certain structural elements original to the unit, such as kitchen cabinets and bathroom fixtures, but vary by policy. Master policies typically don't cover upgrades to structural components. If you remodel your kitchen and install quartz countertops and marble floors, for example, the co-op's master policy won't cover it, but your condo policy might.
Before buying insurance for your co-op, it's important to understand what the board's master policy does and doesn't cover, so you can get the protection you need.
Is there specific co-op insurance?
Co-ops are covered with a condo insurance policy, and not a specific "co-op" policy. The available condo insurance coverages are the same no matter what type of unit you're insuring and include:
- Dwelling: Dwelling coverage covers everything from the drywall in if a covered event damages your co-op unit.
- Personal property: Personal property coverage pays to repair or replace your belongings such as furniture and clothing up to your policy's limit and minus your deductible. Anything that can be picked up and removed from your co-op unit is considered personal property.
- Liability: If you're liable for someone's injuries or damages to their property, liability coverage may help cover your assets if you're sued.
- Loss of use: If you can't stay in your unit while it's being repaired, loss of use coverage may help pay for living expenses, such as food and lodging, above what you normally spend.
- Loss assessment: If there's an accident in common areas of the co-op, loss assessment coverage may help pay for damages that exceed your condo association's master policy limit, up to your policy's limit.
When do you need insurance coverage for your co-op?
There's no law requiring you to buy insurance if you have a co-op. But if you have a mortgage, your lender will typically require it, and many co-op associations also require it. Even if a policy isn't required, buying insurance for your co-op may help protect your investment, personal belongings, and assets with coverage that extends beyond the board's master policy.
How much is insurance for a co-op?
The exact amount you'll pay depends on where you live, the size of your unit, your policy limits, and more.