What Does a Condo Association Insurance Policy Cover?
Understand how your condo association's master insurance policy fits into your overall property protection plan.
Understand how your condo association's master insurance policy fits into your overall property protection plan.
A condominium association insurance policy, often referred to as a master policy, is a specialized insurance plan held by a condominium or homeowners’ association (HOA). Its fundamental role is to cover the shared elements and structures of a condominium complex, protecting the collective interests of all unit owners. This policy is distinct from individual unit owner insurance and is typically funded through the dues or assessments paid by residents.
A typical condo association master insurance policy provides coverage for the shared areas and structural components of the entire building. This includes the building’s exterior, such as the roof, foundation, and external walls. Shared amenities like hallways, lobbies, elevators, stairwells, and recreational facilities such as pools or gyms are also covered.
The policy generally includes liability coverage for accidents or injuries that occur in these common areas. For instance, if a visitor were to slip and fall in the building’s lobby or a shared gym, the master policy would typically cover associated medical expenses and legal fees.
Property damage coverage extends to the building’s structure and common elements against perils like fire, wind, hail, and vandalism. Utilities and essential systems serving the entire building, such as plumbing, electrical systems, and heating, ventilation, and air conditioning (HVAC) units in common areas, are also typically included.
Some master policies may also cover the original fixtures and finishes within individual units that were part of the building’s initial construction. This can include basic flooring, cabinetry, and other built-in elements as they were originally installed. The extent of this interior unit coverage depends on the specific type of master policy the association carries.
While a condo association’s master policy covers collective property, it generally excludes personal property within individual units. This means items such as furniture, electronics, clothing, and other personal belongings are typically not protected by the master policy. Unit owners are responsible for insuring these items through their own individual condo insurance, often referred to as an HO-6 policy.
The master policy also typically does not cover upgrades or improvements made by individual owners beyond the unit’s original construction. If a unit owner installs custom flooring, high-end appliances, or remodeled cabinetry, these additions would usually fall outside the scope of the association’s policy.
Personal liability within an owner’s unit is another common exclusion. If a guest is injured inside a private condominium unit, the unit owner’s personal liability coverage, not the association’s policy, would address the medical costs or legal claims.
Certain perils are frequently excluded from standard master policies or require separate, specialized coverage. Flood damage and earthquake damage are common examples, often necessitating distinct insurance policies. Associations in areas prone to these natural disasters may choose to purchase separate flood or earthquake insurance.
Condo association policies can differ significantly in their coverage scope, influenced by factors such as state laws and the association’s governing documents. Three primary types of master policies define the extent of coverage for individual units.
This policy is the least inclusive, covering the building’s structure and common areas up to the bare walls of each unit. This means elements inside the unit like drywall, studs, and insulation are covered, but fixtures, appliances, and interior finishes like flooring or cabinetry are not. Unit owners with this type of master policy need more extensive individual coverage.
This policy offers broader coverage, including the structure, common areas, and the original fixtures and finishes within units as they were initially built. This can encompass basic flooring, standard cabinetry, and built-in appliances that came with the unit. However, any subsequent upgrades or improvements made by the owner are not covered.
This is the most comprehensive type, covering the building’s structure, common areas, and all fixtures and finishes within units, including improvements made by owners. This policy typically extends to interior walls, ceilings, flooring, light fixtures, plumbing, and built-in appliances. With an all-in policy, unit owners primarily need to insure their personal belongings.
Condo owners should obtain a copy of their association’s master insurance policy and governing documents to understand their specific coverage. These documents are typically available from the homeowners’ association management company, the association’s board of directors, or sometimes through an online resident portal.
Key sections to review within these documents include the declarations page, which summarizes coverage limits and deductibles, and the policy’s endorsements, which detail specific inclusions or exclusions. It is particularly important to identify the type of master policy in place (e.g., bare walls-in, single entity, or all-in) as this directly impacts what individual unit owners must insure. The bylaws and covenants, conditions, and restrictions (CC&Rs) also often outline insurance requirements for both the association and unit owners.
For clarification on specific details relevant to their unit, unit owners can consult with the association’s management or its insurance agent. These professionals can provide explanations regarding the policy’s application to various situations and help owners determine any gaps in coverage that necessitate individual insurance.