Serving on a co-op board or as part of a condo association in New York City comes with a lot of responsibility. It’s a great way to play a leadership role in how your building is managed, it provides an opportunity for you to develop close relationships with neighbors and residents, and it’s a great way to make a difference in where you live.
As a board member, it’s your job to make decisions that affect the overall well-being of members of the association. One of the most critical tasks that condo and co-op boards face is evaluating the need for insurance coverage and purchasing the right policies.
You’ll also need to communicate to your owners and residents what kind of insurance they’re responsible for buying for themselves.
It’s essential to have an adequate policy that provides the necessary coverage while keeping costs reasonable. Today, we’re highlighting essential coverage options for condo and co-op associations in New York City.
Located in Upper Manhattan, Harlem Property Management is the authority on NYC co-op and condo building management and a member of the Real Estate Board of New York. We specialize in managing condos, co-ops, and multi-family buildings. In this blog, we discuss the importance of property insurance.
Property Insurance Essentials for NYC Condo Boards and Co-Ops
Property insurance is crucial for condo and co-op associations. It provides coverage for damage to the buildings and common areas such as hallways, elevators, and parking garages from fire, vandalism, or other incidents. Property insurance usually includes coverage for the building’s structure, outdoor fixtures, and common space. In the event of a disaster, property insurance will ensure that repairs and restoration are taken care of. It can also cover any personal property owned by the building’s association.
When you buy property insurance, always remember to calculate the inflation that we’ve experienced over the last year or two and the inflation that we’re likely to encounter in the future. You don’t want to have inadequate insurance because you forget to factor in the rise in the cost of materials, labor, and supplies. Rebuilding will be more expensive, and you want to make sure your coverage accounts for that.
Protecting Your Building’s Interests: General Liability Insurance
Another critical insurance coverage option for condo and co-op associations is general liability insurance. This policy provides protection against bodily injury or property damage claims resulting from accidents that occur within the buildings and common spaces.
If someone is hurt on the property, you can almost always expect a lawsuit. Maybe a resident falls down the stairs or their guest slips on a wet floor in the lobby of your building. You’ll be sued for that injury, which will include lost wages, medical bills, and “pain and suffering.” General liability insurance will cover any legal fees and settlements.
Protecting Your Personal Interests: Directors and Officers (D&O) Insurance:
D&O insurance is essential, especially for condo and co-op associations and their members. It provides coverage for any claims made against board members for wrongful acts, errors, or decisions made while acting in an official capacity. This insurance coverage typically includes legal fees, settlements, and judgments. You don’t ever expect to need this insurance, but you’ll find that lawsuits and claims arise more often than you’d believe. Make sure there’s a robust D&O policy in place that protects your board members as they carry out the work of your board or association.
Benefits of Umbrella Liability Insurance for NYC Condos and Co-Ops
Umbrella liability insurance provides additional coverage above and beyond the limits of your existing insurance policies, such as general liability and D&O insurance. This policy is necessary in case of a catastrophic event that exceeds your primary coverage limits. It’s essential to have umbrella liability insurance to ensure that your association is protected in the event of a large legal claim.
No one wants to think about the worst case scenarios. But, we never know what’s going to come at us, and it’s better to be over-prepared than blindsided. With the broader coverage that’s provided, umbrella policies don’t add that much more cost above what you’re already paying for insurance. It’s well-worth the investment.
Fidelity Bond Insurance
The Federal Housing Authority (FHA) requires all new and established condominium projects with 20 or more units to carry fidelity bond insurance, which covers theft and fraud by employees and board members. This type of insurance has specific coverage requirements; you need to have enough insurance to cover three months’ of assessments as well as reserve funds.
Homeowner and Renters Insurance
The master policy purchased by the condo association or the co-op board will cover all of the things that we’ve highlighted here. However, individual unit owners need to be responsible for their own insurance coverage as well.
A general homeowner’s policy will cover everything from the “walls in” and the “concrete up” to use industry language explaining what homeowners are responsible for. If renovations are made, your residents will need to know that they’re responsible for insuring all those upgrades and improvements.
When tenants move into a unit that’s owned by one of your association members, you’ll want to make sure that owners understand the importance of converting to a landlord policy. It’s also a good idea to require the tenant to have renters insurance so that their personal possessions are covered as well as their own liability.
Insurance is a huge topic that takes a lot of time to cover. This is just a brief glance at what you’ll want to consider for your building. Being part of a condo or co-op board in New York City means having a significant responsibility. Protecting your association and its members is essential. Choosing the right insurance coverage options is vital to ensure that you’re protected against any potential losses or liabilities.
By understanding the essential coverage options available, you can make informed decisions about the type of insurance policy that’s right for your association’s needs. With the right coverage, you can protect your association and give your members peace of mind.
It’s important for condo boards to consult with insurance professionals to determine the appropriate types and levels of insurance coverage needed for their specific property and situation. Here at Harlem Property Management, we partner with a number of insurance companies. Contact us to learn more; we’d be happy to provide a referral.
If you have any questions about this or anything else related to property management in New York City, please contact us at Harlem Property Management.
