By Neil Garfinkel and Matthew Meisel
When you buy a condominium unit or a cooperative apartment in New York City, the condominium or co-op board will generally maintain a master insurance policy insuring against casualty and liability claims against the building and common areas. However, this master insurance policy will not cover the fixtures, appliances, exposed plumbing or other personal property within the individual unit, or any liability claims against the unit owner. Therefore, when purchasing a co-op apartment or a condominium unit, it is highly advisable for a purchaser to obtain a unit owner’s insurance policy (commonly referred to as a HO-6 policy) or a co-op insurance policy to insure personal property and protect the owner against liability claims.
Additionally, a prospective purchaser may want to consider obtaining a CLUE Report from their insurance company to learn more about insurance costs and the property itself. A CLUE Report (short for the Comprehensive Loss Underwriting Exchange) is similar to the concept of a CARFAX Vehicle History Report in that the report discloses (i) how many claims were filed by the prospective purchaser within the last 5 years and (ii) how many claims were filed against the subject property within the last 5 years. Prior to issuing an insurance policy, insurers will look at the CLUE Report to predict the risk of future claims in order to determine the price of the policy, or whether a policy will be issued at all. If the prospective purchaser has filed several claims within the past few years, the purchaser may not be offered an insurance policy, or the purchaser may have to pay extremely high premiums. The report may also reveal the existence of damage and repairs involving the property. This damage may not be readily visible during a purchaser’s walk through, and therefore, the CLUE Report may provide valuable insight into the true condition of the property.