Homeowners vs. Association Insurance Comprehensive Coverage

Living in a co-op or condo means shedding many of the worries that come with renting or owning a single-family home. There are no worries over mowing the lawn or fixing that crack in the driveway. The doorman looks after your packages and the maintenance man is just a phone call away.

While co-op and condo living eases some of the worries of homeownership, there's one concern all property owners still have to stay on top of: insurance. Multi-family residential complexes are required to carry a comprehensive insurance plan—but is it enough coverage for individual residents? The short answer is no.

Knowing What's Needed

Every homeowner's association is different when it comes to insurance coverage. Some association policies will cover the land, the structure itself and fixtures within each unit. Other policies will cover everything except for improvements made to the private living space, either by the current owner or previous owner. Still other policies will cover only the buildings themselves. As with nearly all other association questions, the definitive answer to what the HOA is responsible for, versus what the homeowner is responsible for lies with the bylaws.

"It's important for co-op and condo owners to get in touch with their homeowner's association and find out how everything is set up and who's responsible for what," says Jonathan Lipton, president of ARM Insurance, a broker based in New York. Without that clarification, enormous problems could arise later, costing potentially thousands of dollars for either the co-op or condo owner, the homeowner's association, or both. A clear understanding of the bylaws and each party's responsibilities is imperative to having a well-insured residential community.

Covering the Community

To be properly insured, says Alex Seaman of HUB International Northeast, a carrier with offices throughout New York and New Jersey, a homeowner's association should have the following coverage in hand, at the very least: property insurance, general liability, directors & officers (D&O), boiler/machinery, crime, workers compensation, and an umbrella liability to maximize coverage in the event of lawsuits. While there's always room for more coverage, this type of master policy with these eight items will protect the association from most of the common issues that arise, from a slip-and-fall in the lobby to a blown boiler to embezzlement to a lost roof. By protecting the association as a whole from these potential troubles, the policy is protecting the community's residents as well.


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