Most people have some form of insurance, whether it is automobile, life, health, dental, or home insurance. It should come as no surprise that most mortgage lenders will require you to show proof of insurance prior to finalizing paperwork. In this instance, the lenders are covering their losses should anything happen between you signing the loan agreement and before the loan is paid in full.
Today, expert property management professionals All Area Realty Services, share a few reasons why co-op or condo insurance is important and answers the question of what happens when damage caused by another owner damages your co-op or condo as well?
Is Insurance Required by Law?
No. Generally, bylaws do not require you to show proof of insurance. In the case of a mortgage, the lender is requesting proof of insurance before they will process your paperwork. Even though homeowner’s insurance is not required, it is strongly recommended.
Here are two cases we've seen in our experience, where homeowner’s insurance would have come in handy:
A neighbor's bathroom overflows, or a pipe bursts and water seeps into your home.
- If neither of you have insurance, you’ll both be suing each other for damages. With insurance, your insurance will take care of getting the damages fixed and get the correct party to make any payments needed
- If the damage seeps into a common area, the building's insurance would need to have a claim filed and that would likely raise all homeowner premiums. In this case, you’d be paying for both your damages and the building's through your premium increases.
- If they don’t have insurance or you don’t have insurance and the fire caused your property damage, after losing any or all of your belongings, you would also need to pay out of pocket for all damages and replacements.
There are several random things that could happen. As much as you try to avoid them, mistakes happen and sometimes they are inevitable. It is best to be prepared for these issues and have a homeowner’s insurance plan in place.
Before you start shopping for the best coverage at the best price, find out what’s covered by your building’s policy and what isn't. Recently, Brick Underground, published a Co-op and Condo Insurance Checklist that is incredibly informative and lists several things for consideration. It is a must read!
Ask your building’s property management company if they have any partnerships with local insurance companies. There is a good chance you'll get a nice price break in working with a local company that is referred by your property manager and that most likely already insures other owners in your building.
All Area is New York City’s leading real estate management company specializing in full-service property management for cooperative and condominium boards in the Manhattan area.