Guarding Home and Hearth The Need for Homeowners Insurance

You live in a doorman building on the Upper East Side - your building has a health club, a concierge, and an attentive board/management team that keeps everything running smoothly, 24/7. With what you're paying in monthly maintenance, you figure all the new fixtures and valuable possessions in your apartment are covered by the building's insurance policy, right? If a pipe breaks in your bathroom and floods the apartment downstairs, it's the co-op's responsibility to repair the damage, right? Your board would tell you if you needed extra coverage, right?

Actually, no. One of the most common misconceptions among co-op-dwellers is that their buildings' umbrella insurance policies will cover their individual units and possessions in case of internal damage (kitchen fires, leaking pipes, and so forth) or catastrophic loss (total destruction by fire, flood, or human malice). The reality is that while a co-op's policy will cover some of the loss, the vast majority of expenses and replacement costs will come right out of the shareholder's pocket if they're not adequately covered on their own. "Every [co-op or condo] owner needs to have their own insurance," says David L. Mittleman, a principal at The Oberman Companies, an insurance brokerage firm in White Plains, New York, "An apartment-dweller needs insurance as much as any homeowner."

Cover Yourself

Although the rules have changed a great deal since the events of September 11th, 2001, many boards still do not require individual shareholders to carry personal insurance coverage. This laxity causes problems when one shareholder's property is damaged because of a problem in another apartment, or in the case of a natural disaster. Robert Mackoul, president of Mackoul & Associates, a large insurance brokerage firm in Manhattan, recalls an incident that befell a building on the Upper East Side one summer several years ago. The building's penthouse occupant had covered the drainage pipes on the roof of the building for cosmetic reasons. Shortly thereafter, a series of violent thunderstorms dumped over seven inches of water on the city. Rather than draining out properly, the water pooled around the covered drainage pipes on the roof, and subsequently began to seep down into the building.

The resulting water damage destroyed two apartments outright; their owners had to move into hotels for nearly a year while their apartments were gutted and repair work was carried out. Other apartment owners were able to stay in their homes, but they too had extensive damage, some to the tune of $15,000 or more. In the end, several hundred-thousand-dollars-worth of repairs were needed to make the apartments livable again. Needless to say, there was rampant finger pointing as to who was at fault.

Worst of all, according to Mackoul, neither of the totaled apartments was sufficiently insured - either to cover their own damages, or the damage their negligence caused their neighbors. The owners of the two destroyed apartments then sued the penthouse owner, says Mackoul, "But payouts won't come any time soon. This will drag on in litigation for years and years."


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  • I am the in the water damage restoration business. You are totally correct about the way insurance works. I have gone into many condominiums which had been destroyed by a leaking pipe or various other types of water leaks only to find out the unit owner didn't have insurance coverage for their personal effects. Like your article said "they all thought it was covered under their building policy". The cost for this type of insurance is very reasonable and is worth every dime. Because when the last thing you ever expect happens, you will be covered. Paul Daniele Puritan Flood Restoration