What the co-op's own insurance covers
In a co-op, shareholders own shares in a corporation, and the corporation owns the building. That means the co-op's insurance is the building's insurance. A shareholder's own policy (often called an HO-6) covers their belongings, their improvements and their personal liability inside the apartment, and is separate.
- Property: the building at replacement cost, plus loss of maintenance income while it is repaired.
- General liability for injuries in the lobby, on the stairs, on the sidewalk and in common areas.
- Umbrella / excess liability on top of the general liability.
- Directors & officers liability for the board. See co-op and condo board D&O explained.
- Crime / fidelity to protect reserve and operating funds from theft, including by a managing agent or employee.
- Equipment breakdown for the boiler, elevators and other building systems.
- Workers' compensation when the co-op employs a super, porters or doormen directly.
Where co-op programs go wrong
Undervalued buildings. The property limit should reflect today's cost to rebuild. Older appraisals often fall behind construction costs.
Unclear lines with shareholders. The proprietary lease and house rules decide who insures what, for example kitchens and bathrooms a shareholder renovated. We read those documents so the master policy and shareholder policies fit together.
Lender minimums. If the co-op has an underlying mortgage, the lender sets insurance minimums. Fannie Mae, for example, requires D&O coverage of at least $1 million for co-op borrowers (source: Fannie Mae Multifamily Guide, Part II, Ch. 5). See lender requirements.
Frequently asked questions
Does the co-op's policy cover my apartment?
The co-op's policy covers the building structure and the corporation's liability. Your belongings, your improvements and your personal liability need a separate shareholder (HO-6) policy. The proprietary lease says exactly where the line is.
Do co-op boards really need D&O insurance?
Yes. Board members make decisions about money, admissions, repairs and house rules, and shareholders or applicants can sue over those decisions. D&O pays defense costs and covered settlements so volunteers aren't paying out of pocket.
Can you give a quick price for our co-op?
Yes. For co-ops with 4 to 1000 apartments in NYC, the instant estimate lets you choose co-op and shows a property and liability range from city records. Jacob will then build the full program.
We already have a broker. Can you review our program?
Yes. Send the current declarations pages and we will review limits, deductibles and gaps, and tell you plainly whether we can improve them.