Cooperative insurance is a set of policies taken out by a housing cooperative. This is an organization that owns a property or properties, with each member of the organization occupying one part of the property. One benefit of this set-up is that the members can pool their resources to either provide their own insurance coverage, or receive a bulk discount from a third party insurer.
A typical set-up of a housing cooperative would be an apartment building. Strictly speaking, the cooperative would own the entire building, with each member having an agreement allowing him to live in one apartment. This is slightly different from the more common housing set-up where people own their apartment outright, but have no stake or involvement in the rest of the building.
There are some key differences between a housing cooperative and standard apartment ownership. For example, the members as a group will be able to decide who is allowed to move into the building, subject to discrimination laws. This power is not available to standard apartment owners. Membership within a cooperative also gives people more say in how the building is managed and maintained.
In its simplest form, cooperative insurance will simply involve each policyholder agreeing to take out home insurance with the same firm. This will mean the total business available to that firm is much bigger. In turn, this may mean it is possible to negotiate more affordable premiums.
The more common and complex form of cooperative insurance is when the members, acting as a group, take out a single policy covering the entire building. In some cases, this policy will cover personal possessions, but the main aim is to cover risks relating to the building as a whole. As well as damage to the building from fire or natural disaster, the policy could also cover legal costs such as liability for injury caused to visitors, such as if someone slips on a communal staircase.
The phrase cooperative insurance can also refer to a British insurance company that trades as The Co-operative Insurance. This has been running since the 19th century, when it began by providing fire insurance. Today, the name does not refer to housing cooperatives, but rather to the fact that the company is owned by its customers, the policyholders. Profits are distributed to customers either in the form of a cash payment or a discount on future premium rates.