Together, let us untangle this complex web.
In this tutorial, we will explain the various insurance plans that condo associations can choose from, what they cover (and don’t), and the little things that are frequently overlooked but are crucial in the event of a crisis.
A Condo Master Insurance Policy: What Is It?
Fundamentally, a condo master insurance policy serves as the building’s communal safety net. It is removed by the condo association, not by individual homeowners, and is intended to save the common areas of the building, such as the walls, roof, elevators, hallways, gardens, fitness centers, and swimming pools—the structure’s skeleton and lifeblood.
The problem is that your condo unit contains contents, including your floors, cupboards, personal belongings, and the nagging fear that arises when your above neighbor’s leak turns into your ceiling’s worst nightmare, are not covered by this master policy.
HO-6 unit owner policies can help with it. Let us avoid getting ahead of ourselves, though.
Recognizing the Three Primary Master Policy Types
Not every master policy is made equally. Actually, how much is protected and how much is left to individual owners—depends on the type your association selects.
1.Policy for Bare Walls-In
The most basic of master policies is this one. Only the building’s fundamental structure, the external walls, common areas, and necessary systems like electricity and plumbing up to the drywall—is covered.
Anything inside the device is not covered. No built-in fixtures, cabinets, or flooring. You are on your own from the inside out.
Ideal for: Associations that want to keep expenses down while anticipating that owners will have greater personal insurance.
2.Policy for Single Entities
The construction and original fixtures within each unit, such as sinks, bathtubs, and built-in lighting, are covered by this policy, which is a more generous choice, provided that they were there at the time of sale.
It excludes any renovations or enhancements made over time by the unit owner, such as bespoke vanities and marble worktops.
Ideal for: Standard-finished buildings where the association wishes to guarantee consistent preservation of the original construction.
3.A policy that is all-inclusive or all-in
The gold standard is this. Every unit is external and interior, including fixtures, finishes, and even owner upgrades, are covered under all-in insurance. It is the closest a building can get to a protective blanket.
Ideal for: Upscale or luxury structures with luxurious finishes and regular updates.
What About Insurance for Individual Condo Units (HO-6)?
The lines can now become hazy.
The lines can now become hazy.
Every condo owner requires their own HO-6 insurance coverage, even if your association has the strongest master policy around. Why? Because the owner’s personal goods and everything within a unit will never be covered by the master policy.
Typical HO-6 coverage includes:
Personal belongings: clothing, electronics, artwork, and furniture
Upgrades inside, such as granite countertops or hardwood floors
Liability protection: in the event that a visitor trips and gets hurt
In essence, it is homeowners insurance specifically designed for condos.
Additional Protection Layers: Additional Insurance to Take Into Account
Standard is not always sufficient.
Insurance for Floods
Either for the building or for each individual unit, that is a different policy. This cannot be negotiated if your condo is located in a floodplain or close to a body of water.
Pro tip: For complete protection, encourage individual owners and the association to have separate flood policies.
Insurance for Directors and Officers (D&O)
Every day, managers of associations and condo boards must make decisions, and occasionally they face opposition. These people are shielded from personal liability by D&O insurance in the event that legal claims are filed over decisions they made—or did not make.
Consider issues with recruiting, fines for violations, poor financial management, or even charges of discrimination.
Insurance for General Liability
General liability coverage takes effect in the event that someone is hurt at the pool or slips on a wet lobby floor. This is necessary to pay for settlements, medical expenses, and legal fees that may otherwise deplete a building’s reserve money.
Because accidents occur in both common spaces and private units, this kind of policy can be carried by associations as well as unit owners.
Insurance Under an Umbrella
The worst-case situation can occasionally cost more than your insurance will cover. After previous insurance has reached their maximum, umbrella plans offer extra liability protection.
Example: Your liability coverage only pays $1 million, but a case awards $2 million in damages. The remaining $1 million is covered under the umbrella policy.
Selecting the Best Insurance Choices: What Counts
how to make an informed decision:
Regarding associations: Assess the age, features, location, and owner preferences of your building first. A bare-bones strategy is perhaps insufficient for a building with upscale interiors and unique finishes.
For owners of units: Do not assume you are covered by the master policy. Go through it. Recognize it. Then, like two pieces of a puzzle fitting together, pick a HO-6 policy that goes well with it.
Final Advice: Seek Professional Assistance
Purchasing insurance should not be a lottery, particularly when people’s livelihoods, homes, and memories are at stake. Having the correct advice is important, whether you are a new condo owner unsure of where to begin or a board member balancing duties.
