Condo Master Insurance: A Master Guide
Understanding the details of a condominium master insurance policy is important for both building and unit owners. Since many areas within a condominium complex are shared, it becomes the owner’s responsibility to secure the common areas. Master condo insurance, also known as condo association insurance, has policies that vary in coverage. each level of coverage includes protection for the roof and exterior of the building and shared areas such as elevators, recreational spaces, outdoor spaces and hallways. While the condominium association or HOA purchases a condominium master insurance policy, unit owners share in the cost of routine fees. A master condominium policy affects both the members of the condominium association and the owners of the condominium unit.
Research shows that five million American households call a condominium home.
Reading: What is condo master insurance
Are you responsible for managing one of those units?
You may be a board member of a condominium association. Or, it could be a property manager. either way, you play an important role in the decision-making process to maintain this structure and protect its occupants.
In this case, you need access to the people, plans, and resources that can help you perform in this capacity. a condo master insurance policy is one of them.
Today we dive into what this coverage entails, why it’s needed, and how you can get it today. We’ll also answer some of your most pressing questions, so keep reading!
what is master condo insurance?
A master condominium insurance policy is a type of insurance policy that is designed to cover the physical structure of your condominium, as well as any common areas within it.
You may also see this type of policy called condominium association insurance or master hoa policy. All condominium associations and cooperatives require a master condominium insurance policy. the property and liability coverage it provides protects the interests of the association and the owners of the unit.
What does the master policy cover?
A master condominium insurance policy protects your condominium association from liability for personal injury or property damage that occurs outside of your building or in the common areas within it.
In addition, there are also coverage levels that extend some protections to the interior of the units themselves.
what are the coverage areas?
A master condo insurance policy covers:
- the condominium structure
- the land around the condominiums
- the common areas
- outside
- framing
- roof
- piping
- wiring
- isolation
- drywall
- walls
- accessories
- soil
- facilities
- original appliances
- swimming pools
- hot tubs
- fitness centers
- gyms
- event spaces
- the main office
- the clubhouse
- fire
- vandalism
- wind
- medical coverage for covered liability claims
- legal fees for covered liability claims
- your personal belongings
- your personal responsibilities
- any improvements made to your unit
- updates and improvements made by the owner of the unit.
- Does your condo master policy cover fixtures or appliances?
- what coverage gaps your primary condo insurance policy leaves behind
- have you remodeled or upgraded your unit?
- what kind of deductible can you pay for a covered claim?
- Do you have outdoor structures (such as a storage shed) that you only use?
- Are you prepared to pay additional out-of-pocket expenses if a covered event renders your condo uninhabitable?
- Have you taken an inventory of your possessions?
- do you have pets?
- Are you in an area at high risk for flooding or earthquakes? (You may need additional coverage.)
- Do you operate a home business from your condo?
Let’s look at each of them in more detail.
the structure of the condominium
As with any insurance coverage, policyholders can make some distinctions when deciding on their plan. In terms of the condo structure itself, association members can choose from three main types of coverage.
bare wall coverage
First, there is the “bare walls in” coverage or the “studs out” coverage. this policy focuses on the actual physical structure of the condominium. this includes only the materials needed to build and maintain the units, including:
While this list may seem exhaustive, it is actually the most minimal.
A bare walls policy does not cover anything inside the unit itself. rather, it is designed to protect only the exterior of the building and the shared spaces inside. this means that it activates if the roof has hail damage, the elevators stop working, there is an accident in the main lobby, or a similar situation.
In turn, each owner is responsible for seeking additional coverage to help protect the structural elements within their units. these include:
single entity coverage
single feature coverage includes everything listed above under interior wall coverage. however, the difference here is that this policy also covers certain types of built-in assets, such as some finishes and lighting fixtures.
Please note that it only covers accessories that were original to the unit. That means if a homeowner makes self-improvements (eg, update countertops, replace carpet, change light fixtures), the newer, more expensive finishes aren’t covered by the master insurance policy.
full coverage
Alternatively, board members may choose to select an “all-inclusive” policy. this policy includes all materials listed above. in addition, it also covers all structural elements and accessories associated with each unit. in most cases, it will also include built-in appliances and any upgrades or upgrades owners make to their units.
Owners of units protected by an all-inclusive master policy will likely require less individual property damage coverage because the only property they are directly responsible for is their own personal belongings.
the land
In addition to the condominium structures, a master insurance policy will also cover any injury or damage that occurs on the shared grounds associated with the property. this includes any grassy areas, playgrounds, parks, walking trails, and similar spaces.
Property grounds also include parking lots, sidewalks, and walkways.
common areas
In most condominiums, there are common areas shared by the residents of the individual units. Depending on the size of the property and the level of services offered, these may include:
Most master policies are designed to cover both limited common areas and general common areas.
How are the two different? limited common areas are those that are not accessible to all unit owners. for example, there may be stairs that only certain residents require access to. or there could be a shared patio that only adjacent neighbors own and use.
On the other hand, the general common areas are those listed above. they are open to all unit owners and are not limited to any particular group. In addition to shared buildings, this also includes elevators, roofs, basements, and other shared spaces.
insurance coverage
deductibles
The condominium association files a claim when damage occurs. Before the insurance company begins to pay for covered damage, a deductible must be met. condominium unit owners generally split the deductible among themselves. this practice makes repairs easier to do, even with a higher deductible like those typically found on a condo master policy.
responsibility
Your condo master insurance policy provides limited liability coverage for common areas. This means that guests injured in common places like the pool, stairs, or tennis courts would be covered. it is vital that unit owners also have a personal responsibility to protect guests while inside an individual unit.
limits
Like any type of insurance policy, the coverage of your condominium master policy has limits. when coverage is exhausted, unit owners are typically responsible for a portion of the out-of-pocket costs. Understanding the limits of your home condo insurance policy is important to the condo association and unit owners. your condo insurance coverage provides liability coverage when exhausted.
risks covered
Like the types of coverage provided by a condominium master policy, the perils covered can also vary. To fully understand all of the events, limits, and exclusions covered by your master policy, it’s a good idea to discuss the terms of your policy with your independent insurance agent. Here are some things you can expect your main condo policy to cover.
Are there any exceptions?
A master policy is designed to be as seamless as possible. even so, some cases and accidents may be outside the scope of coverage.
This includes any improvements or enhancements the unit owners decide to make to their interiors. For example, homeowners may choose to replace their carpet with hardwood floors or remove the original light fixtures in the bathroom for a more modern installation. Unless the association has an all-inclusive policy, these upgrades will fall outside the scope of coverage provided by a master condo insurance policy.
In addition, the policy is only designed to protect up to a certain limit from a covered loss.
This means that there is always the possibility of a serious or significant accident occurring and exceeding your limits.
For example, a massive fire could break out in your lobby and spread to your fitness center, conference center, and event space. you have a master policy for $1 million, but the damages are equal to $1.2 million. this means that the amount of coverage in your policy is not sufficient to restore the property to its original condition.
In this case, the owners of the units would be responsible for what the policy does not cover, dividing the cost between them.
Are condo owners fully covered?
As soon as someone signs up as a unit owner, they are automatically listed as the primary insurance policy holder for the condo. thereafter, a portion of the condo fees they pay will go toward the premiums required to maintain that policy.
However, one of the most common misconceptions surrounding this coverage is that once unit owners are covered by this policy, they do not need to seek any other type of insurance.
this is not true.
why?
While condo associations take care of the exterior and common areas of the property, they allow unit owners the freedom to control what’s inside their homes. in this way, there is a balance of ownership, obligation and responsibility between the owners and the association.
As mentioned, the master policy only provides limited coverage for the condominium structure itself and the common areas. With the exception of an all-inclusive policy, it also omits fixtures, appliances, or improvements made to the condo.
As such, most unit owners still choose to pay for supplemental personal condo insurance to help protect:
Important details in your master condo insurance policy
Whether you’re responsible for purchasing a master condo policy or own a unit and are ready to purchase additional coverage, it’s important to understand certain features of the master policy. Carefully reviewing your master condo insurance policy will help you avoid gaps in coverage. The coverage provided by a master condo insurance policy can vary widely, and understanding the terms of your policy can help you prepare for the unexpected. look for these details in a master condo insurance policy.
Like any type of insurance policy, the coverage of your condominium master policy has limits. when coverage is exhausted, unit owners are typically responsible for a portion of the out-of-pocket costs. Understanding the limits of your home condo insurance policy is important to the condo association and unit owners. your condo insurance coverage provides liability coverage when exhausted.
Using a Master Condominium Policy to Determine Personal Condominium Insurance Needs
Even the most inclusive condominium master policy does not provide the comprehensive insurance coverage that a condominium unit owner needs. A condo owner will need coverage to protect their personal belongings and provide liability coverage for the space within the unit. Also, if you’re still paying for your condo, mortgage lenders will likely require you to purchase an HO-6 policy. This coverage is called condo insurance (also called a HO-6 policy). Knowing the details of your master policy gives you a great starting point when shopping for condo insurance. Here are some questions to consider when shopping for condo unit insurance.
personal condo insurance
Although not required, investing in personal condo insurance is a good idea for unit owners. those who own the property outright can discern for themselves whether or not the policy is necessary. however, anyone who finances or mortgages her unit will almost always be required to purchase personal condo insurance from her lender.
As described above, personal condo insurance covers personal belongings, personal liability, and unit improvements. This way, if a visitor is injured inside a condominium unit, the owner’s policy would cover his treatment.
This coverage also extends to property damage caused by one owner to another unit. For example, suppose a homeowner leaves the bathtub full for too long and water seeps into the floor, damaging the ceiling of the unit directly below. while the condo’s master insurance policy would not protect either owner, the at-fault party’s personal condo insurance would kick in to prevent them from paying out of pocket.
It goes without saying that these types of damages can be widespread and extremely expensive, which makes shopping for personal condo insurance a wise decision. Especially in cases involving water damage, there may be several different insurance policies that come together to help cover the cost of repairs.
Top 5 Condo Primary Insurance Questions
Should my master condo policy cover replacement cost or market value?
replacement cost provides coverage for the cost of replacement or complete repair of damage that occurs due to a covered incident. Market Value only provides coverage for the current market value of the items you are trying to replace. master condo policies offer both options, but replacement cost provides more comprehensive coverage.
Does the condo master policy cover liability?
Your condo master insurance policy provides liability coverage for covered accidents that occur in common areas. however, if a visitor is injured inside your unit, you are responsible for the cost. That’s why condo owner’s insurance is essential.
Who pays the monthly condo master insurance premium?
Owners of condo units are subject to monthly hoa fees. Part of this payment generally goes to pay for the master condominium policy.
How do I determine how much personal condo insurance I need?
After you know what is covered in the master condo policy and determine your risks by answering the questions listed above, you will need to determine the replacement value of your personal possessions and any upgrades made to your unit. Create a list of your possessions and the replacement value of these items. Discuss the coverage you need with your independent insurance advisor and seek advice on additional coverage you may need to fill any gaps.
how often should the master condominium policy be updated?
It’s a great idea to meet with your insurance agent every year to discuss changes within the building and make sure you have the right coverage. Also, if any repairs or improvements are made to the condominium complex, you may need to re-evaluate your insurance coverage. Upgrades often add value, and if your insurance coverage isn’t adjusted to reflect improvements, you could be paying out of pocket for repairs when damage occurs.
how an insurance agent can help
Working with a licensed insurance agent is a smart way for unit owners to better understand the exact type of coverage they need and how much to buy.
Before you start researching your options, keep in mind that a master condo insurance policy has a deductible. These are often higher than most deductibles due to the sheer extent of damage that could occur. That’s why it’s worth comparing the fees associated with different policies.
An independent agent can help you understand the differences in each policy and help you choose the right insurance company to protect your condominium association. This agent can also work with both the condo association and the owners themselves to make sure there are no gaps in coverage levels between the master insurance policy and the personal condo’s insurance policies.
Find the master condo insurance you need today
Looking for a master condo insurance policy to help cover units your board manages or maintains?
if so, we’d love to help.
The best way to obtain condo association insurance is to work with a qualified independent insurance agent who has experience in this industry. this way, you can compare several competitive quotes to find the one that best suits your needs, budget, and plans for the future.
When you’re ready to see your options, get in touch. We are a team of independent insurance agents dedicated to helping our clients meet a variety of personal and business coverage needs. Let’s connect and take this next step together!
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