If I'm renting my co-op out to a tenant, do I need to keep my apartment insurance?

By Virginia K. Smith | February 27, 2017 - 12:59PM

I own a co-op for which I have apartment insurance. I currently have a tenant in that apartment. Does it make sense for me to continue paying for (and having) apartment insurance in this situation?

In short, yes. While you may not need insurance as the person actually living in the apartment, you do need to have one as the person who's renting it out, and as the owner of a unit who, in the event of an emergency, could be responsible for damage to other units in the building.

"It certainly makes sense for the apartment owner to maintain liability insurance, in case the tenant or anyone else is injured while in the apartment," says Jeff Reich, an attorney with Schwartz Sladkus Reich Greenberg Atlas LLP. Plus, if you've made any renovations or other improvements to the apartment—or if some of your personal belongings such as furniture or appliances will remain in the apartment—you'd also want insurance to make sure they're covered if something happens and there's damage.

"You are still responsibility for your liability, both as a landlord and as a neighbor," concurs Gotham Brokerage President Jeff Schneider. (FYI, Gotham is a Brick sponsor.) "If a dishwasher hose breaks, for example, you could well be held liable for the damage to the apartment below."

Plus, he adds, "you are also responsible for insuring the interior structure of your unit. The surface of the walls and floors, built-in fixtures and renovation work."

Nonetheless, you'll need a different policy now that you're a landlord, say our experts. You can't just keep the same policy you had in place before renting your apartment out.

"Your standard policy is voided if you rent out your apartment," explains Schneider. For a nominal extra charge, you can acquire a new policy that addresses the fact that you have a tenant in place. (This kind of policy can also insure you against the loss of rents if a covered peril, such as fire or water damage, forces out the tenant, rendering you unable to collect rent as planned.)

"Your tenant should also have coverage, but this would cover his or her contents and liability, not yours," Schneider notes.

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