Condo Insurance Coverages

Learn what’s already covered on your HOA’s master policy and get the right coverage limits to protect your condo

While coverage needs for homeowners and renters are clear-cut, condo unit owner’s insurance needs can be different depending on the details of the HOA’s “master” insurance policy. It’s worth your time to review your HOA’s bylaws to learn what they are already insuring.

Summary
  • Your HOA’s “master” policy may (or may not) already cover your floors, inner walls and appliances. This will impact your decision about how much dwelling coverage to choose in your condo insurance policy.
  • Learn where your HOA’s liability ends and yours begins, and estimate your liability limits.
  • Your personal condo insurance policy may reimburse you for loss assessments from the HOA.
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What you need to know about HOA “master” policies

These policies are not your responsibility to purchase. They are secured by your HOA’s management company or board of directors and are ultimately paid for with part of the association dues you pay.

HOA master policies typically cover the following:

  • General common areas: condo parks, pools, gym, event space, the association office, parking lots, green areas, walkways and hallways.
  • Liability if a guest to the condominium association grounds is injured due to negligence in maintenance.

There are three common types of HOA master policies, and the coverages they provide will impact your decision about which coverages to buy for your condo unit owner policy, bare walls in or all-in.

Bare walls-in policies

Most HOA policies are bare walls-in. They cover the exterior of the condominium building, including: roof, exterior cladding, framing, plumbing, electrical wiring and the walls’ internal drywall. They do not cover anything attached to the walls, such as: light fixtures, appliances, floors, inner walls, cabinets, countertops, etc.

Single entity policies

Cover exterior walls described in the bare walls-in policy, plus fixtures like floors, countertops, built-in appliances (dishwasher or refrigerator), etc. This policy does not cover any additions or improvements you have made to the condo unit.

All in policies

Cover exterior walls described in the bare walls-in policy, plus fixtures like floors, countertops, built-in appliances (dishwasher or refrigerator), etc. This policy does cover additions or improvements you have made to the condo unit.

Coverages on your condominium “unit owner’s” policy

These policies are your responsibility to purchase. You purchase them from an insurance company just like a homeowner or renter policy. If you have a mortgage on your condominium, it will require that you maintain a condominium unit owner insurance policy.

CoverageWhat does it cover?
DwellingPays for damage to property, other than exterior walls, that would be considered part of your “dwelling,” such as: inner walls, floors, light fixtures, attached appliances, countertops, cabinets, etc., plus additions or upgrades you made to the condo unit.

The amount of dwelling coverage you need depends on the kind of master policy your condominium association maintains. For example, if the master policy is All-in, you may not need any dwelling coverage.
Personal propertyReimburses you for the value of your possessions, including:
furniture, electronics, appliances and clothing. It may cover
damaged or lost items even when they are not on your property,
such as those at an off-site storage locker or with your child at college.
Additional living
expenses
Pays some of the additional living expenses you incur while your
condo is being repaired and you must live somewhere else.
LiabilityCovers your financial loss if you are sued and found legally
responsible for bodily injuries or property damages to someone
else. In a condo policy, you would be personally liable if they are
injured while inside your unit or in a “limited common area,” such
as stairs that lead only to your door.
Medical paymentsPays medical bills for people hurt on your property or hurt by your pets.
Loss assessment
(may be included
or as an optional add-on)
Damage or liability that happens to common areas that is not
covered by the HOA master policy ultimately becomes a financial
responsibility that you share with the other unit owners in the
association. You will be reimbursed for loss assessments that are
due to covered causes of loss in your unit owner’s policy.

How much condo coverage do you need?

Dwelling coverage
The amount of dwelling coverage that you need in your condo unit owners’ policy depends on the type of coverage provided by the HOA’s master policy. If the master policy is bare walls-in, then you need enough coverage for your inner walls, floors, build-in appliances, light fixtures, cabinets, etc. If the master policy is a single-entity policy, then you need coverage for the additions or upgrades you made to your unit. If the master policy is all-in, then you may not need any dwelling coverage at all (your policy would show $0 dwelling coverage limit).

But how do you, as the unit owner, find out what coverage the master policy carries? There are two places you can look. The association’s bylaws clearly state the responsibility of the association and the unit owner. This document shows what insurance coverage the association should maintain. The association’s master policy itself shows what coverage the association actually does maintain. Either one of these should provide you the coverage you need.

Your mortgage company may have a requirement for the minimum amount of dwelling coverage that you have to carry. If their minimum requirement is more than you actually need, you are overpaying for your insurance! In situations like this, you should contact your mortgage provider with proof of your HOA’s master policy, so they will approve reduced dwelling coverage limits.

Personal Property coverage
The total amount you would need to replace your clothing, furniture, appliances, electronics, tools, etc. if they are stolen or destroyed. A helpful rule of thumb is to make the total and add $10,000. This coverage is fairly cheap, so don’t intentionally underestimate.

Liability coverage
The amount you could stand to lose if someone “sues you for all you’ve got.” This is typically your net worth, plus an estimated loss in earnings, such as your annual salary times five. The maximum limits in most condo unit owner’s policies is $500,000. Consider an umbrella policy if you want higher personal liability coverage.

Loss of Use coverage
Reimburses you for expenses you incur if you need to live outside your condo while it is being repaired following a covered loss. This covers expenses such as: relocation, housing, food and living expenses.

Loss-assessment coverage
Most condo unit owner’s insurance quotes offer around $25,000 for loss assessment coverage.

Covered and Excluded Perils in a Condominium Unit Owner’s policy

Your condominium unit owner’s policy has a list of covered and not covered perils. You should review the perils on your policy and decide if there are important perils missing.

Perils Usually CoveredPerils Usually Not Covered
Fire and smokeEarthquakes
LightningFloods
ExplosionsIntentional injuries to others
Wind and hailNuclear hazards
Theft and vandalismDamage from birds, rodents and insects
Burst PipeWear and tear

What’s a loss assessment and when are you covered?

Being a member of a homeowner or condominium association implies that you share the financial responsibility for common areas of the association. Losses to the common areas or liability ultimately fall (partially) on you, even though the association’s management company should carry insurance. Associations charge assessments to owners when there is an expense that exceeds the revenue from membership dues.

Some examples of situations where you may be charged an assessment include:

  • A storm damaged the roof and the association assesses the owners to each pay part of the deductible.
  • A storm damaged the roof and the association assesses the owners to each pay part of the deductible.
  • A vandal spray-painted graffiti on the side of the building and the repair is below the master policy’s deductible.

Your condominium unit owner’s policy will reimburse you for loss assessments charged to you, if the loss was caused by a covered peril in your policy.

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