A Guide to Insurance Options for Condo Associations

A shocking 73.9 million Americans now live in community associations. Condo associations and residents need to choose the correct insurance options to get adequate coverage.

When looking for insurance coverage for a condo association, knowing which insurance policy to choose can be hard. Condo association and unit owner insurance policies are different, and there’s much to consider when choosing either option.

Fortunately, we’re here to help clarify things for you. In this guide, we’ll explain the different insurance options available for condo associations.

What Is a Condo Master Insurance Policy?

A condominium master insurance policy covers a condo building. This policy does not cover the interior spaces of individual condos or the belongings of condo owners. However, it will cover the structure, grounds, and all common areas.

Individuals will need to get individual insurance plans, known as HO-6 insurance policies, for their condos instead. They’ll also be responsible for personal liability coverage.

Owners of condo units in a building will not only have their condos. They will also share certain common spaces. The condo association must have a master insurance policy to cover these areas.

The specific coverages that master insurance policies include will be pretty similar. However, a condo association can choose different types of insurance. These include a bare wall policy, a single entity policy, and an all-in policy.

It’s important to understand the master insurance options available and the coverage offered by these policies. You should also consider the additional coverage needed by the association.

Types of Condo Master Insurance Policies

There are three main types of master insurance policies. Each outlines the amount of coverage offered for a building’s structure and individual units. Here are the types of condo master insurance that you should know about.

Bare Wall Policy

A bare wall policy is a limited policy. It includes coverage for the structure, fixtures, and furnishings in a condo building’s common spaces.

This policy also includes exterior coverage up to the drywall. It consists of the condo’s structure’s framing, piping, writing, insulation, and roofing. This policy doesn’t cover any interior parts of an individual condo.

Single Entity Policy

Single entity coverage protects all exterior items and materials as mentioned in the bare wall policy.

However, a single entity policy will also cover specific built-in property in a condo unit. This includes any light fixtures and finishes initially included when the condo was purchased. It won’t include upgrades or improvements that a condo owner makes.

All-In Policy

This extensive type of master insurance overage will include the exterior of a condo and all parts the unit came with.

This policy provides coverage for lighting fixtures, electrical, and plumbing systems, cabinets, countertops, and appliances, as well as additions and upgrades to an individual unit.

What Is Condo Unit Owner’s Insurance?

When discussing master insurance for a condo, it’s also important to understand a unit owner’s insurance policy, which is known as HO-6 insurance.

A master insurance policy covers the building and the common shared spaces that condo owners own together. A unit owner’s insurance policy covers the unit itself. A condo owner will need to remove their own condo unit policy to get the protection they need.

General condo insurance is very similar to homeowner’s insurance. It will protect a home’s furnishings and the owner’s belongings if anything happens to it. It may also cover liability if a guest is injured in the condo.

Other Condo Insurance Coverages

Aside from condominium master policies and unit owner’s insurance, you might also want to get extra coverage. Some coverages you might want to add to a condo policy include the following.

Personal Flood Insurance

Personal flood insurance protects from financial loss resulting from flood damage.

Flood protection can be purchased as an individual or master policy for the entire building, but coverage can vary. Typically, an individual policy will be necessary to cover personal belongings, furniture, and household goods.

Directors & Officers (D&O) Liability Insurance

A directors and officers (D&O) liability insurance policy is also worth considering. This policy can protect condo association board members, employees, and community association managers from claims against them.

These claims could arise for many reasons. These individuals could be challenged on decisions or for failing to handle certain responsibilities.

When disputes come up, this type of insurance can provide extra protection.

General Liability Coverage

General liability coverage can protect a party against claims of bodily injury or property damage that may occur. If someone is injured on condo property, this coverage can protect against lawsuits and claims. If somebody is injured in common areas or on the grounds of a condo property, the association will be protected.

An individual may also get this type of coverage for their condo unit. This will help protect against claims by other parties.

Umbrella Policy

To add more protection to your condo, you may also want to consider getting an umbrella policy. Umbrella insurance offers liability coverage that extends beyond other condo policy coverage

Umbrella insurance can come in handy when unforeseen circumstances happen. It’s helpful to have if you want the highest level of protection.

Choosing the Best Insurance Options for Condo Associations

If you need an insurance policy for condo associations, be sure that you understand the different coverage types available.

Carefully considering your insurance options and making the ideal choice is essential for protecting your condo. It will allow your association to offer condo owners the right amount of protection.

Need help choosing the perfect insurance policy for your condo building? Contact us today to learn more about how we can help!

FAQs

What does a master policy typically cover for a condo association?

A master policy typically covers the condominium complex’s common areas and structures, including the building exterior, roofs, walls, hallways, elevators, and shared amenities such as swimming pools, fitness centers, and community rooms. It also provides coverage for liability claims related to these common areas, such as slip-and-fall accidents or property damage caused by common area defects.

Are individual condo unit owners required to have insurance?

While condo associations typically have a master policy to cover common areas, individual unit owners are usually responsible for insuring their units and personal belongings. Condo unit owner insurance, often called HO-6 insurance, typically covers personal property, interior fixtures, liability protection, and additional living expenses in case of covered loss or damage.

How does deductible assessment work for condo association insurance claims?

In case of a covered loss or damage to the condominium complex, the master policy’s deductible is typically shared among all unit owners through a deductible assessment process. Each unit owner may be responsible for paying a portion of the deductible, either equally or based on the association’s ownership interest percentage.

Can condo associations adjust their insurance coverage as needed?

Yes, condo associations can adjust their insurance coverage to reflect property, amenities, or association bylaws changes. It’s essential for condo boards to review and update their insurance policies regularly to ensure they have adequate coverage for any renovations, additions, or changes to the property or association structure.

Working with an experienced insurance agent or broker can help condo associations navigate their insurance options and make informed decisions about coverage adjustments.