What is Cooperative Insurance

Cooperative (co-op) insurance is a special type of insurance for people who own co-op buildings. These buildings are typically apartment buildings, but they might also be office spaces, or duplexes. This type of insurance covers the cost of damage or losses that are done to the building as a whole. However, it might also cover the cost of damage done to individual units within the building as well.

When a company owns a residential building, such as an apartment building, then the coverage typically includes theft, damage from fire, personal and injury liability, and many other types of coverage. This is also covered for the areas in-between the apartment units, including elevators, hallways, stairwells, work spaces, the roof and more.

Usually, these policies protect the owner of the building. They are not intended for use by the individual leaser’s or owners of the apartments within the building. Unless the damage that occurs falls under the protection of the insurance documents.

The Big Picture

For someone who owns a large building, like an apartment complex, even if they own this building in conjunction with other people, cooperative insurance is critical for allowing everyone to be safe and fully covered under the insurance plan. If there are several people who have come together to invest in a co-op residential building, then they are allowed to purchase one of these policies together.

Everyone who owns a part of the building is considered a policyholder. This is unique from other types of businesses. Typically, this is set up to coincide with the percentage of the building that each person owns. So, if there are two owners of the building, then each owner is responsible for 50% of the cost of the insurance.

Individual Unit Coverage

If you are investing in a residential building with the intention of owning one particular unit, then you should be familiar with the building owner’s policy. Many people purchase individual units of a larger building, such as an apartment in a big city. However, there are also small investors who purchase condos or purchase other rental spaces with the intention of making money. It is a wise move when you are buying one of these individual lots to find out the information about the policy as a whole.

Usually, the individual apartment space that you own is not typically going to be covered by the co-ops insurance policy. However, if the damage occurs because of something that is covered by that policy, then it might be covered. This is why it is important for you to ask for the information from the building owners so that you can understand what is their responsibility and what is yours.

Personal Property

Personal property is typically not covered under this policy. However, if the loss of personal policy is the result of the building as a whole, then the loss might be covered. For example, if a pipe in the main walkway bursts, and leaks into several units below, then the policy might cover the property loss.

However, if there is a fire in the individual unit that is caused by a candle, then there will be no responsibility on the part of the co-op insurance. The difference is that one of the damages was caused by an event insured by the co-op (the pipes in the walkway). On the other hand, the lit candle that causes a fire is not covered by the co-op insurance. This instance would be covered by renter’s insurance or by insurance that covers a homeowner of the individual unit in this instance.

Final Thoughts

Co-Op insurance is a complicated topic. In fact, the whole business of owning, operating, and investing in co-op buildings is a complicated business that has a lot of ins and outs. As a business owner, the co-op building operators understand and typically have experience in the various ins and outs of co-op insurance. However, for the investor it is important to learn about this business as you prepare for buying and building your own insurance policy for your individual unit. As always, it is better to be safe than to be sorry, and to be sure that you are covering all of your bases.


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