Most co-ops and condominiums have adequate coverage to protect the building against almost any contingency, but that coverage doesn’t extend into the units to cover the homeowner’s improvements, alterations or personal property. The below article by our President, Edward Mackoul, provides important information on Homeowners Insurance for co-ops and condominiums.
When a claim occurs, no one really understands what is the co-op or condominium’s responsibility and what the homeowner’s responsibility is. Homeowners often do not realize that within their unit they are generally responsible for all improvements and betterments made, as well built-in wall units, wall to wall carpeting, wall paper, permanent fixtures, tile and new wood flooring and even the varnish on the floors and the paint on the walls. A common misconception is that since a portion of their common charges are for “insurance”, homeowners believe their interests are protected by the co-op or condominium. Some homeowners who do maintain coverage have Renters Insurance policies, which do not provide coverage for improvements and alterations to the unit. Other homeowners who do have insurance coverage are often underinsured. They don’t realize that they are not only responsible for improvements or betterments they make, but for any made by previous owners. What’s worse is that many lenders don’t always require the homeowner to provide proof of insurance as a prerequisite for a mortgage. At the closing the homeowner must provide a certificate of insurance verifying the building has coverage. No wonder there are often problems and misunderstandings! The following are some of the risks that homeowners face in the event of a claim:
¨ The risk of not being able to restore their unit.
¨ The risk of not being able to replace their personal property.
¨ The risk of not being able to house their family during restoration.
¨ The risk of being sued by the building’s insurance company or by another homeowner for damages caused by the homeowner or their family members.
¨ The risk of being assessed by the co-op or condominium because the building had inadequate insurance coverage.
In order to protect their interest, each homeowner should obtain homeowners insurance. A basic policy is relatively inexpensive. You would be surprised how many homeowners don’t realize that they could obtain a basic homeowners policy for less than the cost of one night at an Atlantic City hotel.
Edward J. Mackoul, CIC – President of Mackoul & Associates, Inc.