Converting an existing apartment building or brownstone into a condominium can be a lucrative endeavor. Because apartments and condos share many similarities, such as being individual units within a larger building, you might assume a condo conversion is a relatively easy transition. However, for a successful conversion, there are certain aspects that property owners should consider, one being insurance.
Muller Insurance is an independent insurance agency that specializes in condo association insurance and other types of insurance in New Jersey, New York, Connecticut, Pennsylvania, Nevada, and other states. Here, we explain what condo insurance considerations you need to keep in mind with this undertaking.
What Is a Condo Conversion?
Condominium conversions are when rental units are turned into individually owned living spaces. Condo owners still share common areas, such as fitness facilities, garages, and outdoor gathering areas. As opposed to building new construction, condo conversions are a quicker and generally more cost-effective route for developers to establish housing opportunities. In addition, condominium conversions provide tenants with a low-maintenance approach to homeownership.
The process of converting an existing apartment building or brownstone into a condominium can lead to litigation. Because condo conversions are a target for various lawsuits, property owners need to have the right insurance coverage in place. If property owners or developers ever find themselves in a predicament without the proper insurance policies in hand, they may end up needing to pay any compensation out of pocket. Consider the following aspects before pursuing a condo conversion:
- Insurance covering apartment construction typically excludes condos.
- The age of the property can be an obstacle for property owners or developers trying to obtain the right insurance coverage for a condo conversion.
- If the building is a brownstone, there often are historical preservation components to consider.
- Condo unit insurance does not cover shared spaces within a condominium complex. Therefore, condo master insurance is needed to cover the building’s exterior and shared spaces.
- Prospective buyers of condo units are encouraged to obtain the proper condo insurance because typical home insurance policies or apartment policies likely won’t cover condominiums.
What Affects Property Insurance Prices?
While insurance rates can vary from company to company, cost often depends on several factors. What you pay for property insurance generally is based on the following components:
Location is one of the biggest factors in property insurance prices. If the property is located in an area with a history of extreme weather-related events, you can expect higher costs for coverage. Conversely, if the property is located near a staffed fire station, you may benefit from lower costs.
Rising Material Costs
Claim rates have risen dramatically in recent years due to the rising price of material costs. Higher material prices directly correlate to higher repair and construction costs. To account for this, insurance companies charge more for coverage.
Understaffed Labor Force
Much like higher costs for materials, an understaffed labor force will impact property insurance prices. This is because construction companies are charging more for their services, driving up the price for repairs. This has forced insurance companies to increase the rates for their premiums.
Find the Right Policy With Muller Insurance
At Muller Insurance, we’ve been dedicated to going above and beyond for our clients for decades, establishing a solid reputation along the way. As an independent insurance agency that works closely with a variety of reputable insurance companies, we offer those we serve several advantages, including affordable pricing for premium coverage. For clients needing proper coverage for a condo conversion, we offer policies from the following providers:
Clients in New Jersey, New York, Connecticut, Pennsylvania, Nevada, and other states wishing to learn more about condo conversations and the insurance required should contact us today at Muller Insurance.