The cost of insuring New York City’s condominiums and co-op apartments has reportedly risen steeply over the last year, with some rate increases approaching 600 percent.
An article in Newsday found that increases of between 10 and 20 percent for smaller units were common, while some high rises have seen rates jump by up to 600 percent according to Robert E. Mackoul, president of Mackoul & Associates, a Long Island insurance agency.
The article cited examples such as a 14-story, 424 unit property in Forest Hills, which saw premiums increase to $250,000 from $85,000, and a 1844 unit Floral Park Co-op where rates had increased from $300,000 to $1.6 million. Insurers now consider that complex, which was formerly treated as one unit, as three separate buildings.
Newsday’s findings appear to validate the insurance industry’s commitment to raise underwriting standards to bring premiums into line with the actual cost of potential claims. The recent decline in investment returns and the undervaluing of losses, compounded by the Sept. 11 attacks, have made sound underwriting practices a real necessity for the industry.
The increases have inevitably been passed on to condo and co-op dwellers, as unit charges have risen sharply. As a result the Federation of New York Housing and Cooperatives & Condominiums is reportedly seeking ways to pool the interests of its members in order to qualify for lower group rates. It plans to hold a risk management seminar in September with industry representatives to review existing policies in an effort to find ways to save money.
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