Insurance Products What's Available, What's Recommended

Having insurance means having financial protection—protection from being financially crippled by having to pay excessive costs to rebuild a life or a home—or a whole building—when tragedy strikes.

Just as individual homeowners have insurance to protect their loved ones, assets, possessions and even their own body, a multifamily co-op or condo building also needs protection from damage to the property or lawsuits from injuries sustained by residents or guests while on the property.

Individuals may have life, property, health, and maybe even liability insurance to cover their own risks—and obviously, whole buildings may have a somewhat more complicated insurance profile than an individual. When management or associations are deciding on the best insurance protection, they have a variety of options and combinations on the insurance menu, including workers’ compensation, property, directors and officers (D&O), crime/fidelity bond and even terrorism insurance options, just to name a few.

Choose Your Weapons

Without insurance protection, buildings would be left financially vulnerable in the event of a fire, flood, construction mishap, injury on the property, or other catastrophic loss. “As a result,” says David J. Byrne, an attorney and chair of Stark & Stark’s community association group in Lawrenceville, New Jersey, “the building wouldn’t have enough money to [pay for damages] and would have to assess its residents to pay the difference—that could be in the millions.”

Choosing which insurance policies will provide the best coverage depends on a variety of factors, including the building’s age and what is outlined and required by the co-op or condo association’s master policy or bylaws. Generally, these policies will cover the building itself, the common areas, potential lawsuits, and injuries sustained while on the property. The unit owners’ individual policies cover what is inside of their own home, including their possessions. Typically, the residents’ monthly fees are used to fund the building’s insurance policies.

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