When it comes to insurance coverage, whether for your health, your possessions, or your home itself, the question is not should you have insurance, but rather, what policy best meets your specific needs? The same question applies to collective properties. To this end, boards and managing agents are charged with the all-important task of determining what insurance coverage is required, while understanding how their community's common policy will intersect with residents’ homeowner policies.
According to Stuart Cohen, owner of the Somers, New York-based City Building Owners Insurance Program, the majority of multifamily offering plans submitted to the New York State Attorney General’s office typically include bylaws, a description of the corporation, and an insurance clause that specifies the minimum coverage that every condo and co-op should carry: what’s to be insured and what’s to be maintained by the entity.
“At a bare minimum, these usually require property coverage for fire, water damage, and vandalism; general liability for the property; and coverage for directors and officers,” says Cohen. “Depending on the building size and the structure of its bylaws, the corporation may need additional coverage like crime, fidelity, workers’ compensation or an umbrella policy, but those aren’t the basics.” He adds that if the Attorney General’s office thinks the insurance offering plan is not adequate, “They’ll throw the offering plan back at you and not approve it.”
In an effort to not only comply with the attorney general, but to ensure baseline coverage, Eric McPhee, executive vice president and director of risk management for the New York City-based Orsid Realty Corp. says co-ops and condos should have the following eight insurance bases covered:
1. Property Insurance (written on an Agreed Value Replacement Cost basis).