You live in a doorman building on the Upper East Side - your building has a health club, a concierge, and an attentive board/management team that keeps everything running smoothly, 24/7. With what you're paying in monthly maintenance, you figure all the new fixtures and valuable possessions in your apartment are covered by the building's insurance policy, right? If a pipe breaks in your bathroom and floods the apartment downstairs, it's the co-op's responsibility to repair the damage, right? Your board would tell you if you needed extra coverage, right?

Actually, no. One of the most common misconceptions among co-op-dwellers is that their buildings' umbrella insurance policies will cover their individual units and possessions in case of internal damage (kitchen fires, leaking pipes, and so forth) or catastrophic loss (total destruction by fire, flood, or human malice). The reality is that while a co-op's policy will cover some of the loss, the vast majority of expenses and replacement costs will come right out of the shareholder's pocket if they're not adequately covered on their own. "Every [co-op or condo] owner needs to have their own insurance," says David L. Mittleman, a principal at The Oberman Companies, an insurance brokerage firm in White Plains, New York, "An apartment-dweller needs insurance as much as any homeowner."

Although the rules have changed a great deal since the events of September 11th, 2001, many boards still do not require individual shareholders to carry personal insurance coverage. This laxity causes problems when one shareholder's property is damaged because of a problem in another apartment, or in the case of a natural disaster. Robert Mackoul, president of Mackoul & Associates, a large insurance brokerage firm in Manhattan, recalls an incident that befell a building on the Upper East Side one summer several years ago. The building's penthouse occupant had covered the drainage pipes on the roof of the building for cosmetic reasons. Shortly thereafter, a series of violent thunderstorms dumped over seven inches of water on the city. Rather than draining out properly, the water pooled around the covered drainage pipes on the roof, and subsequently began to seep down into the building.

The resulting water damage destroyed two apartments outright; their owners had to move into hotels for nearly a year while their apartments were gutted and repair work was carried out. Other apartment owners were able to stay in their homes, but they too had extensive damage, some to the tune of $15,000 or more. In the end, several hundred-thousand-dollars-worth of repairs were needed to make the apartments livable again. Needless to say, there was rampant finger pointing as to who was at fault.

Worst of all, according to Mackoul, neither of the totaled apartments was sufficiently insured - either to cover their own damages, or the damage their negligence caused their neighbors. The owners of the two destroyed apartments then sued the penthouse owner, says Mackoul, "But payouts won't come any time soon. This will drag on in litigation for years and years."

The bare-bones homeowners' policy generally includes two basic components: coverage of one's dwelling and its contents, and protection against liability. According to Ron Tepperman, former president of the Professional Insurance Agents of New York and president of Ron Tepperman, Inc., an insurance brokerage in Manhattan, the first part of a policy covers furniture, fixtures, electronic equipment, and clothing. In other words, says Tepperman, "Anything you can walk out of your apartment with." This coverage protects you in the event of fire, vandalism, theft or water damage.

Tepperman points out, however, that many policies exclude or limit your coverage on certain high-ticket or luxury items like jewelry, furs, fine arts and antiques, unless these items have been specially scheduled under a rider on your policy.

To illustrate the value of these riders, consider a policyholder who owns a $10,000 antique chair. A standard policy will not cover the total value of the chair, but if the owner schedules the chair and its value on his policy, he's entitled to a full refund if the item is destroyed, lost, or stolen. Any collectible - all the way down to baseball cards - can be scheduled, but adding rider after rider can get cumbersome, so if you have many special valuable items to insure, you may want to simply increase your policy by a few thousand dollars. After all, there really is no upper limit to how much you can insure.

One very important component that should be included in your homeowners' policy is coverage for additional living expenses and/or loss of use. If there's a fire or a flood, and your apartment becomes uninhabitable because of smoke and water damage, your insurance company will pay the difference between your everyday living expenses and your new expenses during the restoration of your unit within reasonable means.

One of the most important bits of fine print on any homeowners' policy is coverage of full replacement value versus cash value. With full replacement value, the policyholder is reimbursed for what the object would cost to replace today, as opposed to what it cost less the depreciated value. "After a disaster, you want to be made whole again," says Hank Reineking, area vice president of Arthur J. Gallagher & Co. of New York Inc., an insurance brokerage agency since 1947. "You can't do that without full value."

Along with full replacement value coverage is what's often called "additions and alterations" or "improvements and betterments" coverage. This supplemental policy covers the costs of any improvements or additions you have made to the apartment since moving in, like custom cabinetry or deluxe flooring.

According to Arthur A. Schwartz, president of Masters Coverage Corp. in Manhattan, "Additions and alterations insurance covers damage to any additions or improvements made to an apartment, including wallpaper, carpeting, cabinets, countertops, appliances, or any other improvements made to the apartment by the occupant."

Covering your own alterations and improvements is vital because in the case of damage or destruction of your property, your co-op is only liable for replacing what was originally in the apartment. If you replaced the no-frills pine flooring with polished oak after you moved in, and the floor gets warped from a leak that is found to be the fault of the co-op, the co-op has to pay to fix your floors, yes - but with the original pine, not your beloved oak. An "additions and alterations" policy would cover the cost to replace the oak with oak.

Schwartz advises any unit owner to notify their insurer if they intend to improve or alter their apartment so that they can likewise revise their insurance policy. Schwartz also recommends revising your policy if you make a large purchase for the home, like a new appliance.

Another type of policy addition that is getting more attention these days is so-called "all-risk" coverage, which protects against any tragedy not explicitly stated in your policy. All-risk coverage fills in any cracks between the "named perils" clauses that are clearly spelled out in your policy. There are few exceptions to all-risk coverage, and they include huge catastrophes like nuclear war, riots, earthquakes, and - since September 11th - terrorism.

What constitutes adequate insurance coverage depends largely on the value of what you own and what is covered by your building's policy. Before you purchase a policy, you must assess the value of everything in your apartment, from your clothing to your baseball cards, from your newly renovated kitchen to your custom mahogany flooring.

"Get as much coverage as possible," advises Reineking. "The cheapest isn't always the best. You want enough coverage so that in the event of a loss you can be whole again."

Have your insurance company look at your building's proprietary lease to see what is covered, and speak to a professional property assessor who understands the type of building you live in. Ask your insurance agent about the scope of your policy and what your limitations are, and have him help you assess your needs. Getting proper coverage could be as simple as having a few clauses added to your present policy, or adding a few dollars to your yearly premium.

Essentially, insurance is like a wager; you bet a certain number of dollars against disaster not striking, and your insurance company bets even more money in case it does. While a certain amount of gambling in life is exciting and even fun, it's pure folly to gamble when it comes to personal insurance. In the event of a disaster, theft, or other mishap, you could very easily find yourself not only divested of your valuable worldly possessions, but also responsible for paying for others' losses if the mishap is deemed your fault. A thorough homeowners' policy that covers all the bases and cuts no corners can give you the security and peace of mind that comes with knowing your home - and everything in it - is safe from harm.