5 Things You Should Know About Insuring Your Townhouse, Condo or Co-Op
When it comes to insuring condominiums and co-ops there can be a lot of confusion for both the insured and even for the agent writing the insurance because there are many unknown factors. Each and every townhouse, condo or co-op has it’s own unique coverage needs and it is important to discover what those needs are prior to writing a policy toensure that you have the right coverage for your home.
1.Understand what kind of ownership you have. There are three basic types of ownership:
- A condominium is classified as a multi-unit complex in which the unit’s are individually owned.
- A co-op is similar to a condo because the unit owner occupies a single unit in a multi-unit complex but instead of owning the unit they own shares in the association and have a proprietary lease which entitles them to use of a unit in the complex.
- A townhouse is also considered a condominium. Townhomes are different from condominiums because they are not located in multi-unit buildings. They are usually row houses built in a complex instead of in a multi-unit building.
2. The insurance can vary for each type of ownership. In some cases, you are responsible only for upgrades, in other cases associations make the owner responsible for the entire interior of the unit and others make the owner responsible for the entire structure, including the roof.
Where should you look to find out how your unit is classified? Always start with the association’s governing documents, bylaws, association’s insurance policy declarations, or the deed for your unit. The information outlined in these documents will specify what you are responsible for and what the association covers. This is very important because if you don’t know what you’re financially responsible for then you could be carrying too much or too little coverage on your policy creatingnegativeissues ifyou have a claim and need the insurance. If you wait until you have a claim to find out,it will be too late for you to make changes to the policy.
3. Make sure you have loss assessment coverage. In some instances the entire association will have a claim, but the claim will be much larger than the insurance coverage and will create a gap of coverage. If you have Loss Assessment Coverage, this gap will be covered to help cover the assessment expense.
4. Common Areas are shared and in most cases the master association policy will cover those areas for liability.However, aproblem arises if you have a guest that gets injured in the common areas, your homeowners insurance could be part of that lawsuit. This is why it is important to make sure you have proper liability limits.
5. Most condominiums, co-ops, and townhomes are written on an HO6 form aka “condo insurance” but some need to be written on an HO3 aka “homeowners insurance”, DP3 aka “dwelling fire policy”, or an HO4 aka “renters insurance”. Sound confusing? This is why it is important to talk to your insurance agent to understandyour individual coverage needs.
Knowing the difference between the policy options can help you understand which policy is right for your situation. If you don’t have copies of these documents and don’t know where to start, reach out to someone who is on the board of your association orask one of the other unit owners if they have copies of any of the documents. You can also reach out to the owner or property manager if necessary to see if they can get you copies of the documents you need.
Contact our experienced staffat LG Insurance Agency! We are your local Jersey Shore insurance agent and we can answer your Condo, Townhouse and Co-op questions and work with you to meet your Condo Insurance needs.
All content provided in this blog is for informational purposes only. Topics discussed on this blog relate to insurance products and issues in a general application, and are not an offer of insurance, a guarantee of coverage, or applicable to specific and individual circ*mstances. ContactLG Insurance Agencyfor questions and information specific to your insurance needs.
FAQs
There are actually two different policies necessary to fully insure co-ops and condos—a master policy for the building, and an individual policy to cover you for liability, to protect your belongings and to insure any apartment structural elements that are not covered by the master policy.
Is condo insurance different from co-op insurance? ›
In short, condo and co-op insurance both focus on personal property, while a larger entity handles the structure itself. Condo insurance is for people who own their unit, while co-op insurance is for people who own shares in the building.
What is the rule of thumb for condo insurance? ›
A useful guideline for determining the amount of dwelling coverage is to aim for 20% of the appraised value of your condo. This rule of thumb helps ensure that you have sufficient coverage to protect the interior elements of your condo unit, which might not be covered under the condo association's master policy.
What does co-op mean in insurance? ›
A non-profit entity in which the same people who own the company are insured by the company. Cooperatives can be formed at a national, state or local level, and can include doctors, hospitals and businesses as member-owners.
How is condo insurance different from homeowners insurance? ›
Condo owners don't own the physical building, so condo insurance doesn't provide dwelling coverage in the way that home insurance does. Condo insurance instead covers the interior of your unit, which may include walls, ceiling and floors.
Who has taken over co-op insurance? ›
Wednesday December 2, 2020
Markerstudy Group has today (2nd December) completed on its purchase of the Co-op Insurance underwriting business (CISGIL), commencing a 13-year partnership to provide home and motor insurance products under the Co-op brand.
What type of homeowners insurance policy is typically required on a condominium? ›
If you have a mortgage on your condo, your lender will typically mandate an HO-6 policy. Additionally, your homeowners or condo association may require certain coverages and limits.
What is the 80 rule in homeowners insurance? ›
When it comes to insuring your home, the 80% rule is an important guideline to keep in mind. This rule suggests you should insure your home for at least 80% of its total replacement cost to avoid penalties for being underinsured.
What is an HO6 homeowners insurance policy? ›
An HO6 insurance policy is homeowners insurance for those who own a condominium or co-op unit. As a condo or co-op unit owner, you own and are likely responsible for damages to your unit.
Can you write an HO3 for a condo? ›
An HO-6 policy is what you will need to get as a condo owner, while an HO-3 policy is the most common policy designed for single-family homes. You won't need the type of coverage that is included in an HO-3 policy because it also includes the home's exterior, surrounding land, and additions like a garage or shed.
Co-operative Education will give you a deeper, richer educational experience, real-world work experience, career connections and employment income during work terms. Co-op allows you to alternate career-focused work terms with study terms and receive special co-op degree designation upon graduation.
What are the advantages of co-op ownership? ›
Co-ops are typically less expensive than single-family homes or condos. You may have fewer maintenance responsibilities as a co-op owner. Some co-op ownership fees are tax deductible.
Do I need a cover letter for coop? ›
Students will earn credits for their time worked while in the coop program. All interested students must complete an application form and cover letter. The first section of your cover letter should include information on how the employer can contact you. If you have contact information for the employer, include that.
What is the co insurance on a homeowners policy? ›
Coinsurance is a property policy requirement that means you must insure your home or office to a specific value, often 80% of its replacement cost at the time of the loss.
Does a coop need a run? ›
Runs are optional but are nice to have to keep your chickens out of your garden and flower beds. A run also helps keep your chickens safe from most daytime predators. Most runs are attached to the coop, and a small pop door opens to allow the chickens to come and go as they please between the coop and the run.
How many types of insurance do I need? ›
Most experts agree that life, health, long-term disability, and auto insurance are the four types of insurance you must have. Employer coverage is often the best option, but if that is unavailable, obtain quotes from several providers as many provide discounts if you purchase more than one type of coverage.
