Insuring Co-ops

[jimmyr1978]

My agency insures many condominium associations (building/common elements/GL/D&O/etc.) in the Midwest. One of our clients is one of two cooperatives in Missouri. Unlike New York or Florida where co-ops are common, they are unheard of here.

This client believes that there should be co-op form that is different from typical condo association forms since the ownership of the building and individual units are distinct among the two types of organizations.

Does anyone here insure co-ops? If so, are you aware of any carrier offering a form that provides special coverage for co-ops that takes into account the unique nature of co-op ownership?

[For those of you unfamiliar, in a condo association, each unit owner owns their unit outright and they also own a % of the common elements such as roof, etc. In a co-op, a corporation owns a building, and each tenant purchases shares in the corporation to get exclusive use rights for a specific unit.]

[gregcw]

[For those of you unfamiliar, in a condo association, each unit owner owns their unit outright and they also own a % of the common elements such as roof, etc. In a co-op, a corporation owns a building, and each tenant purchases shares in the corporation to get exclusive use rights for a specific unit.]

I'm not an attorney, but it apears that all that has happened here is that the accociation is a coprporation whch is just another type of entity for the same group of people. As owners of the corporation, I think that they are MORE insulated from liability than if they were just members of the association. I don't think that any other form is necessary as long as the policy is captioned correctly in the name of the corporation.

[CondoRisk]

The same carriers you use to write your condo risks should be able to write your Co-op risk. The only difference would be in the property coverage for the units. The policy would have to be written All Inclusive including any Betterments. Since it is a Co-op the Co-op actually owns all real property inside the unit.

If you need additional markets or just simply like to talk you can find my information at http://www.CondoRisk.net

[gregcw]

The same carriers you use to write your condo risks should be able to write your Co-op risk. The only difference would be in the property coverage for the units. The policy would have to be written All Inclusive including any Betterments. Since it is a Co-op the Co-op actually owns all real property inside the unit.

If you need additional markets or just simply like to talk you can find my information at http://www.CondoRisk.net

I'm not real familiar with this concept, but wouldn't owenrship be either the same as or at least similar to the condominium association and be deteremined by the covenants of the corporation? I know that we should always read the condominium associations covenants to determine little things like is the ownership from 'studs' in, 'sheetrock' in or 'paint' in and who's responsible for little things like plumbing and exterior glass.

I guess my point is that, the same questions need to be answered in both types of ownership and that with a corporation as the condominium building owners you need to be certain that the 'shareholders' are not also 'unit owners' with different insurable interests.

What the corporation may be doing is making it more complex.

[CondoRisk]

The key difference between a condo and a co-op. A condominium owner actually owns the unit in fee simple, like any other homeowner, and owns an undivided interest in the common areas like parking lots, recreations areas, lobbies and hallways.

In a cooperative apartment complex you don't actually own any real estate. Rather, you own shares in a not-for-profit corporation. As a shareholder you get the right to lease space in the building. The corporation owns the common areas. The effects of this are varied. Real property, for example, descends to your heirs while the co-op's tenant-stockholder's shares pass as personalty to your personal representative and may be subject to securities regulations. Generally, a condo is considered real property and a cooperative is considered intangible personal property.

You are right that one should ALWAYS read the Decs and By-Laws to determine insurance responsibilities. Of course for a Co-op the Illinois Condominium Property Act would not apply.

http://www.CondoRisk.net