Q: I live in a co-op in Lower Manhattan. Recently, the board issued a letter urging a shareholder to add the cooperative as an “additional insured” to his homeowner’s insurance policy. The management company also sent an email indicating that she needed to be added as an “additional insured.” The insurance company I've had my policy with for decades says they won't do that. What are the implications if I add either the Cooperative or Management to my policy? What options do I have?
A: It sounds like you need to start a new insurance company.
It is common practice in New York City for co-op shareholders to be asked to add their co-op and management company as an “additional insured” to a homeowner's policy, so this request should not concern you.
If you have a leak, fire, or other problem that originates in your home and spreads to a neighbor's hallway or unit, your insurance company is usually the first to intervene. If your co-op and management company are also insured on your policy, your insurer can help protect them from legal claims related to the problem that arose in your unit, said Tina Larsson, CEO of The Folson Group, a New York consulting firm.
“This is not a warning sign, it is not a penalty and it does not give them access to your personal information,” Ms Larsson said. “It’s simply a layer of protection that helps everyone avoid unpleasant blame if something goes wrong in your home.”
But some insurance companies—including yours, apparently—won't add more insureds.
“The reason for this is that they are extending broad insurance coverage to the co-op that should be covered by the co-op's commercial insurance,” said Jeff Schneider, president of Gotham Brokerage Co. Insurers may also be concerned that shareholders' coverage would be diluted if the limits were shared by other companies.
Shareholder policies generally automatically extend insurance coverage to companies sued because of shareholder negligence, Mr. Schneider said. You should check your existing insurance contract to see whether it contains this language and, if so, whether this satisfies your board and management company. This type of policy sometimes meets additional insurance needs, he said.
If not, you will need to take out a new policy that will provide you with the required certificate of insurance.