What Does Your Condo Association Insurance Policy Cover?

THE COVERAGE IN YOUR ASSOCIATION’S MASTER CONDO POLICY HELPS LIMIT YOUR Liability As A Condo Unit Owner

When you become a condo unit owner, you are not just purchasing a home. You are also investing in the larger condo community and gaining a shared interest in the common elements and amenities of the property. From swimming pools and fitness centers to communal gardens and game rooms, having these spaces may significantly enhance your living experience. However, as a result of your ownership arrangement, you (and all other condo unit owners) are liable for property damage and third-party accidents that occur in these and other shared areas. To help protect its members from the significant financial risks associated with this type of ownership, a condo association will typically allocate a portion of every owner’s monthly association fee to maintaining a condo association insurance policy.

What Does Condo Association Insurance Cover?

Condo association insurance, also called master condo insurance, provides two types of coverage—property and liability—that typically apply to the following exterior building elements and shared spaces of a condominium complex:

It is the property insurance portion of the condo association insurance policy that helps pay for the cost to repair or restore these physical structures if damaged by fire, severe weather, vandalism, a burst pipe, or another covered event. The liability insurance portion assists with legal and medical expenses resulting from an injury, like a slip and fall, that happens in a common area.

Your condo association’s specific insurance requirements are most likely detailed in its bylaws. These requirements dictate the type of master policy your association must have as well as the extent of coverage that will be provided to condo unit owners. For example, your condo association insurance policy could be:

• Bare Walls Coverage, which applies to the building’s exterior, physical structure, and common areas but not to items within the interior walls of individual units, such as fixtures, cabinets, floor coverings, etc.
• Walls-In Coverage, which applies to everything Bare Walls Coverage does as well as typically covering some of the original condo unit interiors, including flooring and cabinets. However, it usually does not cover upgrades by owners after they have purchased their home.
• All-In Coverage applies to everything that a Bare Walls and Walls-In condo association insurance policy does plus adds coverage for unit improvements made by owners.

This information is essential for you and your insurance agent to review because it helps reveal what coverage gaps may exist and the additional condo unit owner insurance you may want to consider to better protect yourself and your investment.

No matter which type of master condo policy your condo association has, there are several insurance coverages that are generally not included, such as personal property protection for individual condo unit owners’ belongings. In addition, condo association insurance does not extend liability protection to accidents that happen within an individual condo unit. To cover these and other excluded risks, each unit owner should work with their local insurance professional to customize a condo insurance policy that provides the protection their condo association’s master policy does not.