Home insurance vs. cooperative insurance vs. condominium insurance

If you live in a cooperative or condominium, it can be difficult to navigate the home insurance market. Cooperative and condo insurance may not be as simple as traditional home insurance, but understanding some key differences can help simplify the buying process. The editors of Finwower examine the similarities and differences between these types of insurance to help you insure your property.

Home insurance and cooperative insurance

When you buy a house or apartment, you own the property and the deed proves it. In the case of a cooperative, you are not the owner, but a shareholder in the company that owns the building. A cooperative is a building cooperative owned by a corporation that allows people to buy shares in exchange for access to the property and its facilities. A cooperative is more like a lease, where you are the tenant and the building owner is the landlord. Shares do not translate into real property, as in the case of owning a house or apartment. They are treated as personal property.

A normal home insurance policy covers the entire structure of the home and personal property. Since you do not own the building when you live in a cooperative, you do not have the benefit or need for traditional home insurance. Home insurance in a cooperative covers only the building unit you own, usually from the foundation up. The master policy underwritten by the cooperative covers the exterior of the building and the exterior of your unit, including common areas and hallways. Not all master policies are the same. Therefore, it may be important to review the master policy to see what parts of the structure are covered so that you can purchase insurance from the cooperative to cover what you are responsible for.

Homeowners insurance and condominium insurance

Buying a condominium is more like buying a house than a cooperative. When you buy a condominium, you are the owner and probably need condominium insurance to properly insure it. However, condominium insurance is more like cooperative insurance than home insurance because you are responsible for insuring only your unit, not the entire building. In fact, the main policy of the co-owners' association covers the common areas and the building structure, just like the main policy of a cooperative. The home insurance policy of a cooperative or condominium corporation generally includes coverage for liability and additional living expenses, just like the homeowner's policy.

Co-owners and shareholders of a co-op may consider adding optional loss assessment coverage. Homeowners living in a homeowners association may also consider this coverage. This coverage can help you pay a covered loss, which is a fee applied to all units to cover the deductible and other amounts paid by the association. For example, a large tree that fell during a windstorm damaged common areas, including the roof of a building. All owners could be charged the same amount to cover the $15,000 deductible on the master policy.

What do home, cooperative and condominium insurance policies cover?

Most HO-3 policies include a home warranty, which covers the structure of the home, including the roof, windows and walls. These policies also cover additional structures on the property, as well as liability, personal property, guest medical expenses, and loss of use (additional hospital expenses).

Insurance policies for condominiums and cooperatives work slightly differently. In most cases, a master policy covers the facilities, while each resident's personal policy generally covers the other, more individual types of coverage listed above. Although the types of coverage and maximum amounts may vary by policy type and insurer, the table below summarizes what is generally covered by each type of insurance policy.

Is condominium insurance more expensive than home insurance?

The insurance policy premium takes into account a number of costs, including level of coverage, dwelling, location, and personal price factors. Standard home insurance policies include the cost of homeowner's coverage, but this coverage is usually included in the master policy of a condominium or cooperative. This difference in coverage generally reduces the cost of a condominium or cooperative policy compared to a policy for homeowners in the same area.

Although a condominium or cooperative policy generally does not include coverage for homeowners, people who live in a building with other units may incur additional costs, such as cooperative or condominium membership dues. These fees are generally used to pay for, among other things, the condominium or cooperative association's primary insurance policy.

Ultimately, whether home, condominium, or cooperative insurance is more expensive depends on the type of property you live in, where you live, and your own pricing factors. To give an idea of the average cost of home insurance in 2023, the average premium is $1,428 per year for $250,000 of coverage.

Frequently asked questions.

What is the best home insurance company?

The best home insurance company probably depends on your insurance needs and preferences. The best insurance company for a homeowner who wants low rates and lots of discounts will probably differ from the best company for a homeowner who wants excellent customer service or solid coverage. Narrowing down companies based on your personal criteria and comparing quotes to see which company can offer you the cheapest coverage can help you identify the best home insurance company for you.

How much does home insurance cost?

The average cost of home insurance is $1,428 per year for coverage of $250,000. Home insurance costs vary depending on location, coverage needs, type of home, and personal characteristics, so your average rates are likely to be very different from this average.

Is cooperative insurance mandatory?

There is no federal or state law requiring cooperatives to carry mandatory insurance. However, many lending institutions and cooperative associations do require it. If you own a condominium or cooperative, most insurance professionals recommend that you purchase additional insurance, in addition to your main policy, to provide financial protection for your personal assets and to cover any gaps in your main policy.