The ads fill the television airwaves each day. Dozens of lawyers encouraging injured parties to sue and collect their claims. It's there on the street, too; every time someone slips or falls in front of a building, there's that look of panic on a property owner's face. When a pipe bursts or wiring goes bad, the first instinct may no longer be to fix the problem, but rather to wonder whose policy will cover the repairs.
The world is a litigious place, and we all need protection. Luckily, for co-op and condo owners as well as for boards, there is a wide range of insurance available to protect from the potentially damaging effects of accidents, incidents and lawsuits. "People can sue for anything - and they do," says Joe Ross of Century Coverage Corp., in Valley Stream, New York. Without the proper coverage, a building and its residents can suffer significant financial strain, wreaking havoc with budgets and operating costs for years after the incident that triggered it is remedied.
Buying insurance is a lot like dressing for bad weather: layers can make all the difference. From terrorism coverage to flood damage, there is a wide range of insurance available for both board and resident. Usually, the building's master policy will cover physical damage for shared areas of the building - basically, the outer four walls of your unit and common areas, like the lobby and laundry room - as well as liability. Individual unit owners or shareholders are responsible for insuring every other aspect of their apartment.
Homeowners can and should purchase their own liability insurance to cover any potential problems that might arise on their premises or in another unit because of a problem occurring in their own apartment - like flooding due to a bathtub left running, or some other form of negligence.
Unit owners who worry about the level of insurance their own buildings carry also might consider purchasing "unit assessment" coverage, which will cover the owner's portion of any assessment charges for losses involving common areas of the building. For example, if a building's $100,000 marble lobby is ruined by a flood, and the building's insurance policy only covers $70,000, the residents likely will be assessed the remaining $30,000, divided evenly among them. If there are 30 residents, they will each be held responsible for $1,000, which would then be covered by their assessment insurance.