Condo & Co-op Apartment Insurance

condoIn terms of insurance coverage, there is very little difference between a condominium unit owner policy and a co-op apartment owner policy.

Cooperative apartment ownership has been around for many years.  Because of the income tax advantage this type of property ownership offers, co-op apartments are widely popular.  Cooperative unit owners often speak of their “owning” their apartments.  Technically speaking, they own shares of a corporation which owns (and manages) the co-op building, and by virtue of this ownership they are granted the right to a proprietary lease which entitles them to occupying the units they own.  A shareowner of a co-op apartment is a party to the co-op common mortgage.

Most state laws provide for a form of ownership in which each owner actually owns the unit he occupies in absolute fee simple.  This type of ownership structure is called condominium.  With a condominium, the unitowner has absolute ownership of the condo unit, like the owner of a house.  The unit owner shares in with all other unitowners the enjoyment and cost of maintaining the “common areas”; the landscaping, hallways, entrances, stairways, elevators, passageways, fire escapes, heat boiler, light and power facilities, roof, water supply, etc.  Each unit, together with its common interests, constitutes real property.  A condominium does not have to be a residential building; it can be a commercial building, such as for offices, mercantile, and shopping centers.

A condo unit owner is not a party to a common mortgage, as in the case a co-operative unit owners.  Prospective condominium unit buyers arrange for their own financing when buying into the condo project.

Condo unitowners and coop apartment owners insure their personal properties in much the same way as other tenants.  The homeowner association (HOA) and the co-op corporation purchase insurance policies on the buildings.  The unit owners purchase protections for their personal properties, furnishings, and liability in cases of lawsuits.

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