Reviewed by Stefan Tirschler
Updated May 30, 2023
co-op in·sur·ance | ˈkōˌäp inˈSHo͝orəns
Definition: Home insurance for residents of a co-operative.
When you and your family move into a co-op, you will need a co-op insurance policy.
Co-op insurance is a type of home insurance policy meant for people who live in housing co-operatives. Co-op insurance can be very similar to condo insurance (more on that in the next section). Whether you own a condo or a co-op share, you don’t own the building itself, so you’re not responsible for insuring it. Your home insurance responsibilities are confined to the area within your unit.
When you live in a housing co-op, you own a share in the corporation that owns the building instead of owning your living unit outright. That can be plenty confusing, but we’ll explain how housing co-ops work further down the page. The co-op has its own insurance policy that covers the building as a whole, so residents don’t need building coverage.
Instead, co-op insurance policies include personal property (movable stuff that you own), additional living expenses, and liability coverages. If you’ve made significant improvements to your unit, like a new hardwood floor or a bathroom upgrade, the co-op’s insurance won’t cover the improvements; you’ll need to insure them yourself, which you can do through your personal home insurance policy.
Condo insurance and co-op insurance are similar. In fact, some insurance companies treat them as being the same thing. After all, the difference between condo ownership and co-op ownership is subtle.
The main difference between owning a condo and living in co-op housing is what you own. When you buy a condo, you own your living unit; you’re free to do whatever you like with it. You can rent it out, you can renovate it, you can borrow money against it, or you can sell it.
When you’re part of a housing co-op, you don’t actually own your living unit. Instead, you own a share of the cooperative, which grants you the benefit of being able to live in one of the co-op’s units.
As it turns out, this distinction doesn’t have much effect on your home insurance. Whether you’re living in a condo or in co-op housing, you’re responsible for insuring only what’s within the walls of your unit. Accordingly, condo and co-op insurance policies are pretty much identical.
Co-op housing is a novel approach to housing affordability. A housing co-operative works a bit like a landlord, but without the actual landlord.
Instead of paying rent each month, co-op residents pay “housing charges.” The monthly payments of each member are pooled together and used for maintenance and improvement costs. Housing co-ops operate at cost (no profit), so housing charges tend to be much lower than rent.
Being part of a housing co-op means you’re sharing ownership of the building. Housing co-operatives are more democratic than rental properties. Residents are expected to take an active role in managing the affairs of the co-operative: attending shareholder meetings, voting on issues, and serving on the co-op’s board of directors (if they so choose). This structure makes housing co-ops feel like little communities. After all, a housing co-op is a corporation where all the shareholders are your neighbours!
Housing co-ops are usually mixed-income developments. They often have minimum or maximum income requirements for families to live in them. Low-income families can apply for government subsidies to help them afford a co-op home.
Joining a housing co-op is a lot like searching for a new job. You’ll send an application to the co-op board, who will review it and decide if they want to invite you for an interview. They want to know that you’re the right kind of person for their community.
If the interview goes well, the co-op will either let you buy a share or add you to the waitlist if there are no openings. Cooperatives often have long waitlists, especially for people that wish to claim low-income subsidies.
The cooperative might also do a credit check before they make their final decision.
Once the co-op invites you to join, you’ll purchase your share. The share price can be anywhere from $1,000 – $7,000; a price of around $2,000 is the most common. Your share will be refunded if you move out of the co-op.
Co-op housing is an excellent option for people with low to medium incomes who want to feel like part of a community. Residents can enjoy some of the benefits of homeownership without the mortgage.
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About the expert: Stefan Tirschler
Stefan is responsible for underwriting leadership, market expansion, and product research and development for Square One's operations. Stefan has earned his Fellow Chartered Insurance Professional designation, and maintains a level 2 general insurance license in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. Stefan is also an Education Committee member and CIP/GIE instructor for the Insurance Institute of Canada.
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