When you buy a condo, it is important to understand the role of your condo association’s insurance policy. This policy provides coverage for certain aspects of the condominium property. It works alongside your personal condo insurance to offer complete protection.
In this blog, we will break down what does a condo association insurance policy cover, how it works, and why it’s essential. Let’s get started.
Table of Contents
What is Condo Association Insurance Policy?
A condo association insurance policy, also known as a master policy, is purchased by the condominium’s homeowners association (HOA). This policy protects shared areas of the building and sometimes structural elements of individual units.
Condo owners still need their own insurance policies. While the master policy covers shared property, personal belongings and interior upgrades are not included.
Types of Condo Association Insurance Policies
There are three main types of condo association insurance policies:
| Policy Type | What It Covers |
|---|---|
| Bare Walls Policy | Covers the structure and shared areas but excludes unit interiors, such as walls, flooring, and fixtures. |
| Single Entity Policy | Includes structural elements of individual units but not upgrades or personal items. |
| All-Inclusive Policy | Covers unit interiors, structural elements, and fixtures, including upgrades made by owners. |
The type of policy your association has will determine what you, as a condo owner, need to insure.
What Does Condo Association Insurance Cover?
Here’s a detailed breakdown of what a condo association insurance policy typically includes:
1. Common Areas
The policy covers shared spaces like hallways, lobbies, elevators, stairwells, and amenities like gyms or pools. Any damage to these areas is handled by the master policy.
2. Building Structure
The structure of the condominium, including the roof, exterior walls, and foundation, is usually covered. The extent of this coverage depends on the policy type. For example:
- Bare walls policies exclude the interior walls of individual units.
- All-inclusive policies cover most interior structural elements.
3. Liability Coverage
If someone is injured in a common area, the association’s insurance will handle liability claims. This includes:
- Medical bills for injuries.
- Legal costs if the injured person sues the association.
4. Property Damage
The master policy protects against property damage caused by covered perils. These may include:
- Fire
- Vandalism
- Storms
- Burst pipes
It is important to check the policy for specific exclusions.
5. Directors and Officers Liability
This part of the policy protects board members from lawsuits related to their decisions while managing the association.
What is Not Covered by Condo Association Insurance?
Condo association insurance does not cover:
Personal belongings: Furniture, electronics, and clothing inside individual units.
Unit upgrades: If you install high-end flooring or custom cabinets, you will need personal insurance to cover these upgrades.
Damage caused by negligence: If a unit owner neglects maintenance, resulting in damage, the master policy will not cover it.
Why is Condo Association Insurance Important?
Protection for Shared Spaces
This policy ensures that repairs and maintenance of shared areas are handled without putting financial strain on unit owners.
Financial Security
It protects the condo association from financial losses caused by property damage or liability claims.
Peace of Mind
Condo owners can live worry-free, knowing the building’s structure and common areas are insured.
How Does It Work With Personal Condo Insurance?
Your personal condo insurance, also known as an HO-6 policy, works alongside the condo association’s master policy.
- Master policy: Covers shared areas and, in some cases, structural elements of your unit.
- HO-6 policy: Covers personal belongings, unit upgrades, and personal liability.
To avoid coverage gaps, you should review both policies carefully.
Tips for Condo Owners
1. Understand Your Master Policy Ask your HOA for a copy of the master policy. This will help you know what is covered.
2. Buy Adequate Personal Insurance Make sure your HO-6 policy covers personal belongings, liability, and any gaps left by the master policy.
3. Stay Informed Attend HOA meetings to stay updated on any changes to the master policy.
FAQs: What Does a Condo Association Insurance Policy Cover
Does condo association insurance cover water damage?
It depends. If water damage occurs in common areas, the master policy may cover it. Damage inside your unit is usually your responsibility.
What happens if a natural disaster damages the building?
The master policy will cover repairs for common areas and structural damage caused by covered disasters. Check the policy for specific exclusions.
Can I rely only on the master policy?
No. The master policy doesn’t cover personal belongings or unit upgrades. You need your own HO-6 insurance for full coverage.
Conclusion
A condo association insurance policy is essential for protecting shared spaces and the overall structure of the building. However, it does not replace the need for personal condo insurance. By understanding what the master policy covers, you can ensure you have the right level of protection.
Disclaimer
This article is for informational purposes only and should not be considered legal or financial advice. Always consult with an insurance professional to understand your specific needs.
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