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Insuring your co-op or condo
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February 14, 2002: 4:42 p.m. ET
Co-op and condo owners get specific slices of the pie. Insure them properly.
By Annelena Lobb
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NEW YORK (CNN/Money) - When it comes to home insurance, you might imagine co-op or condo owners get it easy. A condo owner typically owns the airspace in his home, not the actual structure of the home. A co-op owner owns "shares" of the building, like a stockholder, not the individual unit in which she lives.
So that means they can leave worries about damages to the building association, right? Well -- yes and no. Co-op and condo owners don't have the same insurance needs as someone who owns four walls outright, and the building's master insurance policy should cover the external structure or "shell" of the home.
But unit owners will also need to purchase a personal home insurance policy (type HO-6). That's because the building's policy doesn't protect their belongings. It may not offer liability coverage within their homes, either.
"If the roof of your condo gets damaged, for example, and water leaks into the unit, the master policy would cover the roof repair but not individual unit repairs to things like the ceiling, walls, carpets or furniture," said Mary Alice Horstman, a spokesperson for Allstate Insurance.
Make sure you're covered
"Unit owners should make sure the building association policy is adequate, because it will replace the building if it is destroyed," said David Klein, owner of the David Klein Agency, a New York-based insurance agency that specializes in co-op and condo policies. "We're here largely to help replace your belongings - clothes, furniture, jewelry, television, et cetera."
Check what's covered in your building's master policy by reading your association bylaws or property lease. The master insurance policy typically covers the common areas in the building, like the roof, basement, elevator and walkways, Horstman said.
"Some condo owners have 'bare walls coverage', which means that the building pays for everything from the drywall in," said Craig Parker, commercial operations superintendent at State Farm Insurance. "It depends on things like whether you own the four walls of the condo, or just the airspace in between them. You might not be responsible for insuring the walls, for example, but you might have to insure your wallpaper and cabinetry."
Next, a tall order: Take an inventory of everything you own. Make a list, and use a video camera to videotape the contents of your home as well. Store it with a friend or relative - that way, if your home is lost, you won't lose the record as well. The inventory is necessary because your HO-6 policy must have enough coverage to replace your belongings if they are all destroyed.
The average annual premium on a State Farm HO-6 policy is between $250 and $350, Parker said. You may also need to buy floaters, or individual insurance policies, to insure certain valuables, like expensive jewelry or artwork.
Besides structural damage to the outside of your property and the destruction of your belongings, the last issue you need to consider is liability coverage. "The master policy will have liability insurance in it for shared spaces, like sidewalks, gutters and walkways," said Carolyn Gorman, a spokesperson for the Insurance Information Institute.
Your HO-6 policy will also provide liability coverage. That way, you're covered for accidents in the spaces you own. If someone falls and injures himself in your apartment, for example, your policy would provide liability coverage, not the building policy.
Share and share alike
Make sure you know the deductible on your building's policy. If there are damages to a shared space, every member of the co-operative or condominium will be asked to contribute money to reach that deductible. If the policy actually covers some damages that are specific to your property, you will have to reach that deductible yourself.
"As a condo owner, I would want to be sure my policy would cover the difference between my deductible and the condo policy's deductible, if I am required to use the building's insurance for something like a burst pipe," said Gorman. "If their deductible is $1,000, and the deductible on your policy is $100, all you may have to do is kick in that $100 and your policy will add the subsequent $900."
Finally, make sure your policy has built-in coverage for unit assessments. Unit assessments are fees levied on individual unit owners to pay for repairs on shared property. But HO-6 policies cover unit assessments -- if they result from damage to the property due to "covered perils".
If a windstorm huffs and puffs and blows the roof off the co-op, your HO-6 policy will pay for any unit assessments, Parker said. (But if the new roof results from a board decision to replace it for maintenance or aesthetic purposes, it's up to you to shell out the cash.) 
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