What Is Condo Master Hazard Insurance?

Condo master hazard insurance is a collective policy that protects shared property within a condominium community. It safeguards the physical structures and common elements used by all unit owners. Distinct from individual unit owner policies, it focuses on the property as a whole, providing a financial safeguard against damages or liabilities affecting shared aspects of the complex.

Understanding Condo Master Hazard Insurance

Condo master hazard insurance is purchased and maintained by the homeowners’ association (HOA) or condo association, not by individual unit owners. Its purpose is to protect the physical structures and common elements of the entire condominium complex. This includes the building, its foundations, exterior walls, roof, and shared amenities like lobbies, hallways, and recreational facilities. The cost is typically funded through regular HOA fees paid by all unit owners. Unlike single-family homeowner’s insurance, a master policy focuses on communal aspects, providing protection individual owners cannot secure for the entire complex.

What Master Policies Cover

A condo master hazard insurance policy typically covers significant structural components of the building and its common areas. This includes the building’s primary structure (roof, foundation, exterior walls) and shared utilities like plumbing and electrical systems. Common areas such as lobbies, hallways, elevators, fitness centers, swimming pools, and parking lots are also generally covered. The policy protects against common perils like fire, windstorms, hail, and vandalism. It often includes liability coverage for incidents in these shared spaces, such as visitor injuries.

However, master policies generally do not cover individual unit owners’ personal belongings (furniture, electronics, clothing). They also typically exclude coverage for the interior of individual units beyond basic structural elements, unless the policy type dictates otherwise. Personal liability for incidents within a private unit is not covered. Certain perils, such as floods, earthquakes, or damage from wear and tear, neglect, or insect infestations, are commonly excluded and may require separate policies.

Common Types of Master Policies

Condo master hazard insurance policies generally fall into three main categories, defining the scope of coverage for individual units. A “bare walls-in” policy, also known as “studs-in” coverage, provides the most limited protection. This policy primarily covers the building’s exterior, shared common areas, and the basic structure of individual units up to the unfinished surfaces of walls, ceilings, and floors. It does not cover fixtures, appliances, or improvements within the unit. Unit owners are responsible for insuring everything from the drywall inward, including cabinets, flooring, and appliances.

An “all-in” or “all-inclusive” policy offers the broadest coverage. This policy covers the building’s structure, common areas, and includes fixtures, built-in appliances, and some improvements within individual units. With an all-in policy, a unit owner’s responsibility for interior coverage is significantly reduced, typically limited to personal property. The third type, “single entity” coverage, falls between the other two. It covers the building’s structure, common areas, and original fixtures within individual units, such as bathroom fixtures and standard flooring. However, it generally does not cover upgrades or improvements made by unit owners; any enhancements beyond original finishes need individual owner insurance.

How Master Policies Interact with Individual Condo Insurance

Individual condo unit owners typically need their own HO6 insurance policy to supplement the master policy. An HO6 policy covers aspects not included in the master policy, such as personal property (furniture, electronics, clothing) within the unit. It also provides coverage for improvements or upgrades made to the unit’s interior, which certain master policies may not cover. Additionally, an HO6 policy includes loss of use coverage, providing temporary living expenses if the unit becomes uninhabitable due to a covered loss.

Personal liability for incidents within the individual unit, such as a guest injury, is also covered by an HO6 policy. When a master policy claim occurs, especially one affecting individual units, deductibles are an important consideration. Master policies often have high deductibles, which the association may assess to unit owners. An HO6 policy often includes “loss assessment coverage,” which can help pay a unit owner’s share of an assessment if the master policy’s deductible is passed on or if repair costs exceed its limits. The master policy protects collective property, while the HO6 policy safeguards individual assets and liability within a unit.