What Is Master Insurance on a Condo?

Condominium ownership presents a unique insurance landscape. Master insurance plays a central role, providing coverage for shared elements and the overall building. Understanding this distinct insurance framework is important for any condo owner.

Understanding Master Insurance

Master insurance, also known as condominium association insurance, is a collective policy secured by the Homeowners Association (HOA). This policy protects the common elements, shared areas, and the building’s overarching structure. Premiums for this coverage are typically integrated into the regular HOA fees paid by individual unit owners.

The purpose of master insurance is to safeguard the collective interests of all unit owners by insuring shared assets against damage or liability. This coverage extends to elements such as the building’s exterior, roof, foundation, and common amenities like elevators, hallways, swimming pools, and recreational facilities. It is distinct from an individual condo owner’s HO-6 policy, as the master policy focuses on the building and shared spaces, not the individual unit’s interior or personal belongings.

Types of Master Policies and Coverage

Condominium master insurance policies vary in their scope, particularly regarding what they cover inside individual units. These differences dictate the extent of coverage an individual unit owner will need. The three primary types are “bare walls,” “single entity,” and “all-in” policies. Each type defines the association’s responsibility for the unit’s interior.

Bare Walls Coverage

“Bare walls” or “walls-in” coverage is typically the least comprehensive option. This policy covers the building’s main structure and common areas, but it generally excludes anything inside the individual unit’s walls, such as fixtures, appliances, flooring, cabinetry, and any improvements. Under such a policy, unit owners are responsible for insuring nearly everything within their unit from the drywall inward.

Single Entity Coverage

“Single entity” or “original specifications” coverage offers a broader scope. This policy covers the building, common areas, and the original fixtures and finishes within each unit. However, it typically does not cover upgrades or renovations made by the unit owner, nor does it include personal belongings.

All-In Coverage

The most extensive type is “all-in” or “all-inclusive” coverage. This policy provides broad protection, covering the building, common areas, and almost everything within the individual units, including fixtures, appliances, and many improvements, regardless of who installed them. Even with an all-in policy, a unit owner still needs personal coverage for their belongings and liability. The specific type of master policy is important for condo owners to understand, as it directly influences what their individual HO-6 policy must cover to avoid gaps.

Master Insurance and Your Individual Condo Policy

Master insurance and an individual HO-6 policy work in conjunction, forming a comprehensive insurance strategy for condominium owners. The HO-6 policy covers aspects not addressed by the master policy, ensuring complete protection for the unit owner. It acts as a complementary layer of coverage, filling potential gaps left by the association’s policy.

An HO-6 policy typically covers the unit owner’s personal property, including furniture, electronics, and clothing. It also provides personal liability coverage for incidents occurring within the unit or caused by the owner, protecting against legal expenses if someone is injured in the condo. Additionally, this individual policy is crucial for covering improvements and betterments made to the unit, particularly when the master policy is “bare walls” or “single entity.”

Loss assessment coverage is another important component of an HO-6 policy. This coverage protects unit owners from special assessments levied by the HOA to cover master policy deductibles or uninsured losses that affect common areas. Master policy deductibles can range significantly, from $5,000 to $250,000 or more, and a portion of this can be passed on to unit owners. While some HO-6 policies may include a limited amount, additional loss assessment coverage can be purchased.

Furthermore, an HO-6 policy usually includes additional living expenses coverage. If a covered loss makes the unit uninhabitable, this portion of the policy can help pay for temporary housing, meals, and other increased costs. To ensure adequate protection and avoid coverage gaps, unit owners should obtain a copy of their HOA’s master policy or declarations page. Reviewing these documents helps in coordinating the individual HO-6 policy with the master coverage, ensuring both the unit and personal assets are sufficiently protected.