Caution--Wet Floor The Ins-and-Outs of Insuring Your Building

For building boards, management companies, shareholders, and unit owners, the issue of insurance often becomes complicated: how much insurance - and of what kind - does one's building, or even a shareholder/tenant, need? Is there such a thing as too much coverage? How does a board know if they're adequately insured? And, more importantly, what does that policy protect, or not protect? Then there's the issue of liability within the home, and whose insurance company is responsible.

Barbara Strauss, executive vice president for York International Agency, an insurance brokerage in Manhattan, says every co-op building should have a package policy, which consists of property and liability insurance. "You should also have an umbrella policy, a fidelity bond, a director's and officer's liability policy, a worker's compensation policy and a New York State disability policy," she adds. "Those are the standard policies that every co-op should carry."

According to Nancy Gelardi, senior vice president of Arthur J. Gallagher, a brokerage based in White Plains, New York, those standard "policies would cover physical damage to the building, as well as any suits made against the building if anybody should be injured."

New York State disability insurance is required along with worker's compensation insurance, according to Alex Seaman, a senior vice president with Kaye Insurance Associates in Long Island. This coverage provides a benefit of up to $170 a week for a maximum of 26 weeks for a non-work related disability. This could include maternity leave for an employee or a sports-related injury that occurs at a property. Buildings also insure their operating equipment, Seaman adds. "Almost every property has boiler and machinery insurance along with their property insurance. General liability and Directors and Officers insurance are typically purchased at limits of $1 million. Umbrella or excess liability insurance provides additional coverage above that amount."

How Much is Too Much?

Insurance costs are also dictated by a building's square footage. Strauss says her firm often assigns costs using construction factors that are in use today to develop a value. "It makes a difference if you're a fire-resistant building, or if you're a jointed masonry building, for example. On fire-resistant buildings you insure anywhere from $170 to $200 a square-foot, and on brick buildings you buy anywhere from $130 to $150 a square-foot."

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