| Home Insurance Basics |
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Buying a Policy |
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What
type of insurance do I need for a co-op or condo?
If you have purchased a condo or co-op, the
bank will require insurance to protect its investment in your
home. You may, however, need more insurance to cover your
personal items, liability or fees that may be charged to you
regarding shared areas of the building like the lobby.
You will need two separate policies to protect
your investment:
- 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, theft or
other disaster listed in your policy. You also get liability
protection.
- A "master policy" provided
by the condo/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.
To adequately insure your apartment, it is important to know
which structural parts of your home are covered by the condo/co-op
association and which are not. You can do this by reading
your association’s bylaws and/or proprietary lease.
If you have questions, talk to your condo association, insurance
professional or family attorney.
Sometimes the association is responsible for
insuring the individual condo or co-op units, as they were
originally built, including standard fixtures. The individual
owner, in this case, is only responsible for alterations to
the original structure of the apartment, like remodeling the
kitchen or bathtub. Sometimes this includes not only improvements
you make, but those made by previous owners.
In other situations, the condo/co-op association
is responsible only for insuring the bare walls, floor and
ceiling. The owner must insure kitchen cabinets, built-in
appliances, plumbing, wiring, bathroom fixtures etc.
Also ask your insurance professional about the
following additional coverages:
- Unit assessment
This reimburses you for your share of an assessment charged
to all unit owners as a result of a covered loss. For
instance, if there is a fire in the lobby, all the unit
owners are charged the cost of repairing the loss.
- Water back-up
This insures your property for damage by the back-up of
sewers or drains. Water back-up may not always be included
in a policy. Check to see that it is included.
- Umbrella liability
This is an inexpensive way to get more liability protection
and broader coverage than is included in a standard condo/co-op
policy.
- Flood or earthquake
If you live in an area prone to these disasters, you will
need to purchase seperate flood and earthquake policies.
Flood insurance is available through FEMA's National Flood
Insurance Program ( http://www.fema.gov/nfip/ ). Both
flood and earthquake insurance can be purchased through
your insurance agent.
- Floater or endorsement
If you own expensive jewelry, furs or collectibles, you
might consider getting additional coverage since there
is generally a $1,000 to $2,000 limit for theft of jewelry
on a standard policy.
When purchasing insurance, it is important to find an agent
or company that specializes in condominiums or co-ops. Also
don’t forget to ask about all available discounts. You
can reduce your rates by raising your deductibles and by installing
a smoke and fire alarm system that rings at an outside service.
If you insure your unit with the same company that underwrites
your building’s insurance policy, you might also get
an additional reduction in premiums.
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