Condo vs. Co-op Insurance: What's the Difference?

Condos and co-ops have different insurance needs than houses. Getting the right insurance means knowing the difference.

co-op apartment

Whether you own a condominium or cooperative apartment, you'll want to have the proper dwelling, liability and personal property insurance. There is no one-size-fits-all insurance coverage for the two types. This is primarily because the coverage necessities are not equal between the two, especially in regards to dwelling coverage.

This article will go over:

What is in condo and co-op insurance?

If you own a condo, you own the actual property of the unit. With a co-op, also known as a housing cooperative, you own a share of the co-op corporation instead of real property.The simplest way to understand the difference between condo and co-op insurance is by learning the basic coverage points of each. Each policy type includes dwelling, liability and personal property insurance. Knowing what each type does is important for knowing what insurance coverage you'll personally need.

Dwelling insurance

A condo building is covered by HOA insurance. Co-op buildings are covered by cooperative apartment corporation insurance. Depending on the limits of your condo HOA's insurance policy or your co-op corporation's coverage, you'll want your insurance policy to provide dwelling coverage for the unit you live in that your building's insurance does not.

Dwelling insurance, also known as hazard insurance, protects the physical structure of the covered unit, be it a condo or a co-op. HOA insurance usually covers the exterior walls of the condo building, leaving you to cover the interior walls, floors and ceilings. Co-op apartment corporation insurance is often more limited. For example, coverage for fixtures may be different depending on whether you have a condo and a co-op, explained more below.

Liability insurance

The liability coverage needs for condo or co-op insurance tend to be similar. Liability coverage helps to pay for legal and medical fees for bodily injury or property damage you cause. This also covers injury or damage caused by your family members or pets. Liability coverage may apply to injury and damage that occur both inside and outside your home.

Personal property insurance

Personal property insurance coverage is similar for both condo and co-op insurance. The key difference in personal property coverage for condo or co-op coverage comes down to what you need personally to cover all your possessions.

Personal property insurance protects your belongings from damage, destruction or theft. This may include. While personal property insurance may not cover higher value items like jewelry and art collections, companies often sell insurance riders that can provide coverage.

How much condo insurance do I need?

The amount of dwelling coverage you need in a condo insurance policy, otherwise known as an HO-6 policy, relies on what your HOA's master policy type is.

A master policy is the insurance coverage that your HOA has to cover the structure of the condo and its common areas. With both condos and co-ops, master policies are often paid in part by your HOA fees. The two different master policy types are:

  1. All in: An all-in master policy covers the internal and external surfaces and fixtures of your condo unit. What this means is that you really only need to have personal property insurance. Any improvements or betterments you do to your condo to increase the value are not necessarily covered by an all-in policy, so check with your condo insurer.
  2. Bare walls in: This is the opposite end of the condo dwelling coverage spectrum. With bare-walls dwelling coverage, you will need to buy insurance for everything within the confines of your condo unit. This includes all fixtures and appliances in the unit.

For your condo's liability coverage, the standard condo insurance policy often carries a minimum of $100,000 coverage. While that may seem like a decent chunk of change, a prolonged legal battle or hospital stay can eat through that quickly. We recommend getting a minimum of $300,000 in liability coverage, and $500,000 if you can afford it.

With personal property insurance, you will want to purchase enough coverage to pay for the complete replacement of all your belongings. The most accurate way to figure out the replacement cost of your stuff is to compile an inventory list. It may take some time to put together, but it will only need to be updated when you make large purchases. Furthermore, it can speed up insurance claims resolution considerably.

It should be noted that home insurance for a townhouse is often close to the same as condo insurance. Talk to your townhouse insurance provider to see what the differences are.

What co-op insurance do I need?

Co-op dwelling coverage usually comes only as bare walls, leaving you to insure the interior walls, ceilings, floors and fixtures such as sinks, counters and lights. This a key difference in dwelling coverage between what is needed in a condo unit and a co-op unit. You may need fixture coverage with a condo; you almost definitely will with a co-op. Any improvements you make to the co-op unit will have to be insured under your dwelling coverage as well. This is also an important difference from condo insurance, which might cover improvements you make.

Since the external area and hallways of the co-op complex should be covered by your co-op apartment corportation's policy, you'll need to worry about liability incidences in your co-op unit more than dwelling insurance. Like condos, you should go with at least $300,000 in liability insurance, and $500,000 preferably. It may seem odd to buy the same liability insurance amount for a co-op as for a much larger house. However, your liability limits have nothing to do with how big your home is. An accident leading to a $400,000 medical bill can happen in a house, condo or co-op apartment.

Figuring out what you need for personal property insurance is the same for condos and co-ops. Make an inventory list of your possessions and calculate your personal property limit based on what it would take to replace it all.

How much does insurance for my condo or co-op cost?

Condo insurance costs an average of $488 per year. This can fluctuate depending on your policy limits and deductible, personal property value and if you're going with an all-in or bare-walls policy. Costs for co-op insurance are similar to condo insurance.

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