One might assume that the insurance policies carried by a building would cover any mishaps that would affect residents. This, however, is a misconception. A co-op corporation or condo association takes responsibility for the structural aspects of the building. They are also responsible for the common areas of the building, including the lobby, hallways, stairs, elevators, and other areas shared by the building’s occupants. However, "every [co-op or condo] owner needs to have their own insurance," states 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.
Unit owners themselves are basically responsible for everything visible inside of their apartments, including wall coverings, tile, pipes and plumbing within the unit–virtually everything that the eye can see. If there is damage to any furnishings, fixtures, walls, or flooring of the apartment, it is the responsibility of the occupant to provide an appropriate remedy for the problem.
The Necessity for Personal Coverage
Although co-op and condo owners alike are responsible for the upkeep of their apartments, many boards do not presently mandate personal insurance coverage. This can cause some very serious problems should building occupants suffer damage to their apartments at the hand of a fellow tenant or any natural disaster. Robert Mackoul, president of Mackoul & Associates, an insurance brokerage firm in Manhattan, recalls a particularly disastrous incident involving a building on the Upper East Side in August 1999. There had been a rain storm that resulted in over seven inches of rain. Prior to the storm, the penthouse occupant covered the drainage pipes on the top of the building for cosmetic reasons. This act caused the water to seep down into the building. Two apartments downstairs were literally destroyed; the residents had to live in hotels for over eight months. While other apartment owners were able to stay in place, they too had extensive damage, some to the extent of $15,000 to $20,000. In total, the result was several hundred thousand dollars worth of repairs. Needless to say, this situation led to a lot of finger-pointing as to who was at fault.
Unfortunately, neither destroyed apartment was sufficiently covered. What’s the insurance-related recourse in a situation? Theoretically, if one occupant was found to be at fault, their insurance would likely cover their damage and the damage to their neighbors. However, Mackoul says that situations like this are never resolved quickly or without hitches. The owners of the two destroyed apartments are now suing the penthouse owner but paybacks won’t come any time soon. Mackoul says, "This will drag on in litigation for years and years." The moral of the story: Make sure you have your own personal coverage, that it’s up-to-date and adequate!