Private Insurance Co-Ops: An Alternative To Traditional Insurance?

Co-op insurance is a type of property and casualty insurance for owners of co-op apartments or other cooperative organisations. It covers losses to the building or individual units, including burglary, fire damage, and liability for residential co-ops. The co-op building generally provides coverage for common areas such as hallways, foyers, basements, roofs, elevators, and common walkways. The Affordable Care Act (ACA) also includes provisions for cooperative health insurance programs, known as Consumer Oriented and Operated Plans (CO-OPs). These are private, nonprofit, state-licensed health insurance carriers that can be sold inside and outside the health insurance exchanges. As of 2024, three CO-OPs remain operational in five states.

What is co-op insurance?

Co-op insurance is a type of property and casualty insurance for owners of co-op apartments or other cooperative organisations. It covers losses to the building or individual units, including burglary, fire damage, and liability for residential co-ops.

Co-op insurance is also known as "condo insurance", as the difference between a condo and a co-op lies in the ownership structure. Condo owners own a unit within the building, while co-op owners own shares of the building and lease the unit they live in.

The co-op building generally provides coverage for common areas such as hallways, foyers, basements, roofs, elevators, and common walkways. The co-op association's insurance policy generally protects the building but not the individual owners' apartments unless the damage occurs as a result of something under the association's jurisdiction.

The most common type of co-op insurance is property insurance for residential co-ops, which covers the common areas of the building. Co-op insurance allows policyholders to buy more extensive coverage at a more affordable cost by pooling with others who have similar risks.

The term "co-op insurance" can also apply to health insurance. The Affordable Care Act (ACA) includes provisions for cooperative health insurance programs called Consumer Oriented and Operated Plans (CO-OPs). These are private, nonprofit, state-licensed health insurance carriers.

What does co-op insurance cover?

Co-op insurance is a type of property and casualty insurance for owners of co-op apartments or other cooperative organisations. It covers losses to the building or individual units, including burglary, fire damage, and liability for residential co-ops.

The co-op building's insurance policy typically covers common areas such as hallways, foyers, basements, roofs, elevators, and common walkways. The co-op association's policy generally protects the building but not individual owners' apartments, unless the damage is a result of something under the association's jurisdiction.

Co-op insurance covers five main areas:

• Dwelling (your unit) including improvements, alterations, additions, etc.
• Personal property, meaning the stuff you own
• Loss of use for when your place becomes uninhabitable
• Personal liability for when you're sued or accidentally cause harm to others
• Medical payments to others for covering any issues that arose at your place, or anywhere else (under $5,000)

Co-op insurance is designed to protect your belongings and the inside of your unit. It also provides liability protection for bodily injury or property damage to others.

How is co-op insurance different from homeowners insurance?

Co-op insurance is a type of property and casualty insurance for owners of co-op apartments or other cooperative organisations. It is also known as an HO6 policy. Co-op insurance covers you, your unit from the walls in, and your belongings. This includes five main areas: dwelling (your unit), personal property, loss of use, personal liability, and medical payments to others.

Homeowners insurance, on the other hand, covers the entire structure of a home, as well as your personal belongings. This includes the roof, walls, ceilings, floors, foundation, and everything in between.

The main difference between co-op and homeowners insurance is ownership. With a co-op, you are a shareowner of the corporation that owns the building. You do not actually own the building, so you cannot get (and do not need) traditional home insurance. Instead, the co-op master policy purchased by the corporation insures the exterior of the building, common areas, and the exterior of your unit.

In short, condo and co-op insurance focus on personal property, while a larger entity handles the structure itself. Condo insurance is for people who own their unit, while co-op insurance is for people who own shares in the building.

Do I need insurance for my co-op?

If you live in a co-op, you are not a homeowner but a shareowner of the corporation that owns the building. A co-op is a housing cooperative owned by a corporation that allows people to buy shares in exchange for access to the units and amenities within the property. A co-op is more like a rental agreement, where you are the tenant and the building owner is the landlord. Your shares do not translate to real property like owning a house or condo does. Instead, your shares are treated as personal property.

Because you do not actually own the building when you live in a co-op, you cannot get (and do not need) traditional home insurance. With co-op homeowners insurance, your policy only covers the unit you own shares in, usually from the studs in. The co-op master policy purchased by the corporation insures the exterior of the building plus the exterior of your unit, including common areas and hallways. This is similar to an HOA providing insurance coverage to the exterior of a condo complex.

Not all master policies are the same, so it is important to review the master policy to see which parts of the structure are covered. That way, you can get co-op insurance to cover what you are responsible for.

Whether you need homeowners insurance for a co-op can vary depending on your co-op and on the co-op master policy maintained by the corporation that holds the property rights. However, purchasing cooperative home insurance can often provide more financial protection for your belongings and living spaces.

In short, you do need insurance for your co-op, but the type of insurance you need is different from traditional home insurance.

What does co-op insurance cost?

The cost of co-op insurance varies depending on the location and the amount of coverage purchased. The average annual premium for homeowners insurance was $1,192, according to the National Association of Insurance Commissioners (NAIC). In contrast, the average cost of co-op insurance is significantly lower at $471 per year, as co-op owners are not insuring the entire building structure. The average co-op policy in Wyoming is $340, while the average premium in New York City is $515.

Co-op insurance covers five main areas:

• Dwelling coverage: This includes your unit and any improvements, alterations, or additions made to it.
• Personal property coverage: This covers the belongings you own.
• Loss of use coverage: This provides protection if your place becomes uninhabitable.
• Personal liability coverage: This protects you if you are sued or accidentally cause harm to others.
• Medical payments coverage: This covers medical issues that arise at your place or anywhere else (usually up to a limit of $5,000).

It is important to note that co-op insurance does not cover the entire building, facilities, or grounds. Instead, it covers your individual unit from the walls inward, including built-in appliances and bookshelves. The co-op's master insurance policy typically covers common areas such as stairways, elevators, laundry rooms, and the roof.

When considering the cost of co-op insurance, it is also worth mentioning that co-op owners might need additional coverage for high-value items. For example, jewelry, fine arts, or antique items might require a rider or umbrella liability insurance for added protection.

Frequently asked questions