What insurance do co-op and condo buildings need to have?
It is important for co-op and condo owners and boards to be properly insured against various risks. Each type of insurance listed below serves a specific purpose and provides coverage against different risks such as fire, theft, accidents, and various lawsuits.
| Homeowners insurance | Homeowners insurance is a must-have for all co-op and condo owners, as it provides coverage for accidents that occur inside their units. The coverage is designed to protect the homeowner's personal property and liability in case of damage or loss. What systems the co-op or condo association is responsible for versus what needs to be covered by the homeowners’ policy is determined by the offering documents. |
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| Property Insurance | This type of insurance provides coverage for the building and its systems in case of damage caused by fire, leaks, etc. Be sure to review exclusions for terrorism, natural disasters, mechanical failures, and lead paint. |
| General Liability Insurance | This policy covers the association for claims involving bodily injuries and property damage resulting from its operations. It may also cover those who are held liable for damage to the property. |
| Package Insurance | This is not insurance against stolen or missing packages. The "package" here is when some insurance carriers combine property and general liability insurance into one policy, which can save money. |
| Directors & Officers (D&O) Insurance | This type of insurance protects the directors and officers of the association from lawsuits. For co-ops or condos with retail space owned by a third-party real estate investor, separate policies may be required. |
| Crime / Fidelity Insurance | This provides coverage for loss of money or other assets due to theft, fraud, or forgery by employees, service providers, and board members. |
| Cyber Security Insurance | With an increase in proptech and remote monitoring of building systems in the cloud, cyber security coverage is becoming increasingly important. Cyber security insurance is different from crime policies as it covers economic damage due to failure of network security or privacy controls. |
| Umbrella | This provides extra coverage for injuries, property damage, and lawsuits above and beyond the limits of other policies. |
| Errors & Omissions (E&O) Insurance | E&O is a professional liability insurance that many businesses hold to cover court costs and settlements. This type of policy is not commonly used in co-ops and condos today. |
| Flood Insurance | Flood insurance is determined by the geographical location of the building and flood zones. An experienced insurance broker knows whether the building needs flood insurance or not. Here’s a map. |
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