Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
For a co-op, I have been told that the owners need insurance to cover the interior and half-way through the walls. There appears to be no co-op type insurance, but the closest approximation is condo insurance. The property manager say that the co-op's mutual policy carries a dwelling deductible of $100K, so we should buy insurance to cover $100K dwelling. This seems not to make sense. A condo of 1000 square feet do not usually have a dwelling of $100K. How do you calculate dwelling coverage for a condo?
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I live in a co-op and my insurance policy is one for a condo. It is basically a renters policy which covers me for contents and personal liability along with loss assessment in case the co-op gets sued and its own insurance coverage is not enough and the costs extend to the shareholders. There are also optional coverages such as off-premesis theft and for extremely valuable personal items within the apartment such as furs, jewelry, etc.
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Property damage insurance is governed by state regulation so it varies a lot from state to state. Two good sources of info would be a good local insurance agent and the state government insurance commissioner's office.
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I got my co-op insurance from State Farm. They seem to know what I was looking for when I called them and got the insurance within a week.
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I offer my own experience as a co-op unit owner. I do have coop-specific insurance available to me here.
There are three main aspects to the insurance:
1) Liability (property damage and bodily injury; sometimes personal injury as well);
2) Contents; and
3) Rebuilding (not always called that).
What would happen if a tragedy struck your building and it was completely destroyed; say, by the fire department making a firebreak against a huge municipal conflagration? The whole building and everything in it is reduced to ashes and blown away by the wind.
Typically a co-op will carry enough insurance to rebuild, to current code, with the same units at the same size, with all behind-the-walls plumbing; electrical; gas; whatever. You will have to replace the interior: kitchen; bathroom; ceiling lights; interior walls & doors; electrical outlets; probably fuse box; everything.
You need enough insurance to restore your unit from bare drywall.
Sometimes insurance will help with alternate living expenses while the building is being reconstructed. Some policies also offer limited coverage against increased assessments to cover building damage. I'm sure there are more clauses in more policies in more buildings in more states than I am familiar with.
Maybe you could try to find out (your insurance agent may be a source, if not a completely unbiased one) the cost per square foot to completely renovate (which is much the same thing).
Does that help?
Phineas J. Whoopee
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