An Overview of Condominium Master Insurance

You may already be familiar with the ins and outs of master insurance policies if you manage condos. But, if you’re getting into the game for the first time, learning about these policies and what they cover is important. The same goes for individuals interested in buying a condo unit or those who already own one. Master policies include a few coverage limits and don’t exempt individual unit owners from taking out their own policies. Let’s look at what master condo policies cover below. 

Master Policies Cover Common Areas

In a nutshell, master condo insurance policies cover the building itself and any shared or common areas. These areas can include swimming pools, landscaping like shared greenbelts, and on-site fitness centers. Master condo policies also protect a homeowners’ association from loss and lawsuits. Say a visitor trips and falls in the parking lot and threatens to sue the association for their medical bills. The master policy would cover the visitor’s expenses up to the policy’s coverage limits. 

Condo associations are typically looking for master condo insurance classified as “bare walls-in” or “all-in.” Unit owners need to know what type of policy their association has because it will impact what coverage they’ll need for their homes. A “bare walls-in” policy covers the common areas and the building’s structure but stops at the plumbing and drywall. However, an “all-in” master policy will cover fixtures and installations within individual units. This coverage may extend to appliances, such as stoves and dishwashers. 

HOA Dues Cover the Cost of Master Policies

Homeowners’ associations, or HOAs, might send a monthly check to the insurance carrier to maintain master policy coverage. However, HOAs collect dues from condo owners each month or quarter that pay for the master policy. Therefore, each unit owner is paying for the policy in smaller or proportionate amounts.

Say a master policy premium costs $3,000 a year for a condo building with four units. This comes to $250 a month, which ends up being $62.50 per condo owner. The building’s HOA assessments for each owner are $200 a month. Around $63 of those dues help pay for the master policy while the remaining funds go toward other costs, such as common area maintenance.

Condo Owners Need Separate Unit Policies

Even with “all-in” master policies, condo owners should take out their own coverage. This is known as condo insurance, which covers damage to the interior of the unit and the loss of personal property. A master policy does not protect a condo owner’s belongings, including furniture, clothes, and keepsakes. 

Condo insurance may also cover interior water damage from leaks, depending on the cause. Say someone leaves a faucet running by mistake, and water overflows onto the floor, damaging the flooring. That owner would need to file a claim against their individual policy to pay for the cost of ripping up the floor and replacing it. Individual condo insurance policies will also cover break-ins and the theft or destruction of personal property.    

Buying a condo can be an attractive option for those who want the benefits of homeownership without all the maintenance and risks. However, unit owners will contribute to the costs of master and individual condo insurance policies. While master policies cover damage and loss to the building and common areas, individual policies protect personal belongings and the inside of each unit.