Co-op and Condo Liability Insurance: How Much Is Too Much? Protect Yourself Without Going Overboard


Property insurance is one of the most important components of protection for common interest communities.  It protects the property, association, corporation, board members, and residents from potentially financial consequences in the event of legal liability and physical disasters. If you are unfamiliar with what that exactly entails, the following will serve as an introduction.

Types of Policies

Co-op and condominium associations generally purchase three types of insurance: basic general liability, directors and officers coverage, and an umbrella liability policy.

Basic general liability insurance policies cover property damage, bodily injury, medical payments, defense costs, and personal injury.  

Directors and officers (D&O) insurance is a form of liability insurance that covers board members of a corporation or association as indemnification for losses or advancement of defense costs in the event that damages are the result of a good-faith decision made by the board or board member.  

Umbrella liability insurance is extra precautionary insurance. It is designed to help protect from major claims and lawsuits, and as a result it helps protect assets. It does this by providing additional liability coverage above the limits of other policies.


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  • Hi Cooperator! Can you illuminate boards and shareholders on the best way to achieve coverage for the market value of a co-op apartment, given that a co-op owns the building, and the apartment to the plaster let's say, and the shareholder owns the paint/flooring/fixtures. For example, assuming a co-op unit is worth $1 million, and the co-op shareholder has homeowners insurance covering say $200,000, should the co-op have coverage worth at least $800,000 toward that unit? times however many units? I feel like the $3 million example in the article ignores the market value of the building and units therein. If the building blows up (g*d forbid), how are the shareholders made whole, if the co-op does not have insurance at least equivalent to the collective market value of the units? I asked my management company what is the total value of our policy, and does it cover the market value of the units, and they had no clue. Thanks.
  • Also can you please advise where to find these RPGs. We were quoted nearly $10,000 for a less than $2 million policy covering 5 units. How/where is one able to secure $100 million in coverage for $4,000 as the article mentions? Thanks
  • How do board's create a policy for individual apartment owners to provide proof of homeowners insurance? What steps and how best to in force it. Thanks
  • Elizabeth Picarella on Tuesday, August 7, 2018 11:44 PM
    @CE, property and casualty insurance is not intended to cover the market value of your co-op. If you were to have a complete loss, the association's policy would respond to rebuild the structure, while your individual HO-6 would provide coverage for fixtures and installations. Regardless of whether or not the physical structure is damaged or destroyed, you still retain the shares in the co-op, and your ownership remains intact. It is important the the individual policy holder have adequate "loss of use" coverage to ensure additional living expenses are covered through the rebuild period.