Why Do I Need Insurance For My Co-op?

Several years ago I decided to get out of the “Renter’s Club” and join the“Homeowners’ Club”. Of course, living in New York City, my obvious choice was purchasing a co-op. Technically, I didn’t actually buy real estate because when you buy a co-op you are actually purchasing “shares” in the cooperative, similar to when a stockholder buys shares in a company. But I didn’t care. I wanted to be a homeowner!


One of my first decisions once I became a “homeowner” was whether or not to buy insurance. Some co-ops actually require it, and are legally allowed to do so, but my co-op didn’t. However, as an insurance agent, myself, I needed to analyze my exposure to risk and determine what was in my best interest.

I have heard many people who own co-ops say, “my building has their own insurance so I don’t need to buy even more insurance!” While it’s true that the building does have their own insurance, they are insuring something completely different from what I would be insuring. The co-op’s insurance covers the actual structure; the concrete walls, the windows, the floors, the internal plumbing, the roof, the elevator, etc. In case of a major fire, the co-op’s insurance company would provide the money to rebuild. However, guess who gets hung out to dry? That’s right, me the unit owner.

Who’s going to pay to replace my bedroom and/or living room furniture? Who’s going to pay to replace all my clothes? What about my 60” television and that stereo that keeps the neighbors up all night? I am! Unless I have co-op insurance. It’s technically called an HO-6 policy, but you can ask any agent for co-op insurance and they’ll know what to do.

You’ll want to make sure that any insurance you buy has built-in coverage for unit assessments. Assessments are fees that the Board will add to your monthly maintenance fee to pay for repairs or other items NOT covered by the co-op’s insurance policy. With a well-written HO-6 policy, such extra assessment fees will be covered by your policy. Otherwise, you have to pay for them out-of-pocket!

Finally, there are many other things that an HO-6 policy will cover that cannot be listed here. The point is, you really MUST have insurance. The average annual premium is around $300.00. Believe me. If I could find a good reason to stop paying that $300.00 per year, I would, but the risks just aren’t worth it. You really need to have a detailed conversation with your insurance agent to make sure you get exactly what you need for your specific co-op since your co-op’s bylaws are probably different from mine. Therefore, your insurance needs would be slightly different.

So don’t put it off. Bite the bullet and join the “Insured Homeowners’ Club”and then you too can rest easy at night!

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