When you purchase a condo, you are buying into a unique set of circumstances as far as the property and the insurance needs. A homeowners association or perhaps a condominium board will generally control the grounds and the property. You bought the four walls that surround the home and you pay the association fees that will help with the maintenance of the grounds and any amenities within the community or building.
This ‘shared’ ownership creates a bit of a gray area when there is any type of property damage or liability or any insurance claims. In some cases, it can be difficult to determine whether you should file with your own condo insurance or through the HOA master policy.
What is the master insurance policy for HOA?
The master insurance policy is the insurance that the HOA carries or that the condo board will hold. This insurance is typically something that they carry in order to protect against any type of liability or legal issues.
With this policy, the building structure and common areas are protected from damage, so if a tree fell and destroyed a structure in the common area, the HOA and their carrier would take the tree out and repair the structure. Also, if multiple units are run off of the same heating unit and there is a breakdown, the HOA will take care of the expenses.
There are 3 types of master insurance policies:
- Bare walls
- Walls-in
- All in
Condominium insurance
Condo insurance, which is also known as HO-6, has basically the same coverage as most other homeowners insurance plans, except it does not cover the structure or the walls of your condo. It will cover any events that take place within the walls of your particular condo. This also includes your personal belongings and any type of liability. It is inclusive of theft and personal property. You need to fill out an itemized inventory list of your condo as you would with any home, listing all of your belongings and the value of each item. Be sure to keep this inventory list safe.
How to know whether it is a master or condo claim
There are a few steps you can take to help you when you move into your condo so you understand the master and condo insurance and how to approach them.
- Request. Upon moving into the condo, you want to request a copy for your records of the master policy as well as the association’s by-laws. This will explain what is and is not covered by the HOA. There will be either ‘all-in’, ‘walls-in’, or ‘bare-walls-in’. All-in policies cover some of the parts of your condo, e.g. appliances, flooring, plumbing, or electrical. They may cover all or go in half with you. Bare-walls-in will not cover anything that is inside of your walls. This policy is something you’ll want to give to your condo insurance carrier so that they’re able to fully cover you.
- Submission. When a claim does need to be submitted, take into consideration who would be responsible; the amount of the property damage, and the cause. There are many factors that will come into play, whether all units were affected by a devastating storm or just your unit, whether someone was hurt inside your unit or on the outside, and whether there was a leaky roof causing interior damage. Determining responsibility is involved and tricky.
- Coverage. Assess which coverage is going to be the greatest. A lot of master policy deductibles are extremely high in order that condo owners to make as few claims as possible. It would be something to consider when going over the thought process as to how to go about filing the claim. But your carrier may deny it if it’s found to be the building’s responsibility.
- Insurance. If your condo’s master policy has a high deductible, it may be cost-effective for you to purchase more coverage with your own personal carrier. Also, look to see exactly what the master policy covers. If they don’t hold flood insurance, you’ll want that added benefit.
- Discounts. Your personal carrier may give you discounts based on amenities offered through the association such as if it’s a gated community, smoke detectors, and security systems. Check with your carrier for safety deductions.
Make sure when you move in you receive all of the information about the master policy deductible and all that they cover so that you can go prepared to your personal carrier and get the protection that you need in order to be fully taken care of.
