What to Look For in Your Condo Master Policy

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In 2021, over 97% of home insurance claims focused on some form of property damage. It's important to make sure the condo association and unit owners both have the right policies in place to cover these potential claims

Your condo must be protected by a Condo Master Policy. But how can you know if you have gotten the right policy?

Keep reading to discover everything you need to know about the condo master insurance policy.

What Is a Condo Master Policy?

A condo master policy gets chosen by the association of condo owners. This policy focuses on covering shared areas, including walls, hallways, and public relaxation areas.

Because a master policy focuses only on these shared spaces, individual condo owners must still take out their own independent coverage. But to get the right amount of coverage, it is important for each condo owner to know the exact details of their condo association master insurance policy.

Communication Is Key

You might be surprised at how often a condo unit owner does not know what is covered in the condo master policy.  If they are unaware of what all is covered they may not get the right personal coverage either.  This can leave coverage gaps.

Communication is key when it comes to condo association insurance. The association needs to communicate what the master policy covers and how the master policy helps to maintain the quality, safety, and beauty of the condo itself. And condo owners need to pose questions and concerns about the insurance to the association and keep an open mind about the role of this insurance.

It's important for everyone to remember that insurance protects us from threats that we never saw coming. With that in mind, let's dive into the specifics of the master policy that every condo owner should know and understand.

The Bare Walls-In Policy

One type of condo insurance is the "bare walls-in" policy. This type of coverage is limited to structural elements of the condo but does not cover the interior.

What does this mean? For example, a bare walls-in policy would cover issues with things like drywall, wiring, framing, piping, and roofing. Such coverage is important because damaged pipes can lead to floods and damaged wiring can lead to fires.

However, a bare walls-in policy does not cover any installations, fixtures, or appliances within a condo. Of course, when it comes to these elements inside a condo, they can be protected with a condo unit owner's individual insurance.

The All-In-One Policy

An all-in-one policy is very simple to understand. Basically, it covers everything that the bare walls-in policy covers. But it also covers what that policy did not, including the fixtures, installations, and built-in appliances.

An all-in-one policy is always a more robust form of insurance coverage than a bare walls-in policy. Of course, it always costs more as well. Because these costs get shared among condo owners, it's important for the association to get the coverage the condo needs without forcing everyone to pay too much for a policy they don't need.

Coverage of Common Areas

Earlier, we discussed how the condo master policy only covers shared spaces and common areas. Before we go any further, it's important to review how these spaces are defined in your own condo.

For example, such spaces include places like the parking lot, walkways, and assorted green areas outside of the buildings. But it also includes places like parks, pools, gyms, and any special event spaces.

The more these areas are used each day, the more likely they are to get damaged by anything from simple wear-and-tear to unexpected accidents. But a good condo association master insurance policy can help keep these areas protected in the event of an accident.

Understanding the Deductible

Every insurance policy has some kind of deductible. This deductible must be met first before the policy will cover anything. But how does the deductible work when it comes to condo association insurance?

If the condo association has to file a claim, then residents of the assorted condo units may have to pay a small portion to help meet the deductible.  The condo association may also pay the deductible if they have been collecting money for this expense as part of regular fees.  They can then pull from this fund at the time of the claim. In some cases, if the damage only affects one unit, that condo owner may have to pay the deductible. 

There is a chance a person could spend years living at a condo and never have to pay their share of a deductible. But knowing what the deductible amount is can help condo unit owners prepare themselves in case they ever have to pay a large amount to the local condo association to help pay for the damage.

Getting Additional Coverage

So far, we have focused entirely on the condo master policy. However, since this policy only affected shared spaces, a condo unit owner will still need to take out separate condo insurance to protect their specific unit.

Before taking out independent insurance, a unit owner should make sure they understand how the master policy works. This may impact certain decisions, including what types of insurance they take out and what their coverage limits will be. And the possibility of having to pay a pro-rata deductible amount at any time may influence how much they're willing to pay for a monthly insurance premium.

There are many different factors to should consider before taking out a personal insurance policy for the condo. And the rest of our guide is going to walk unit owners through what some of the additional coverage is and why it may be important to unit owners and their families.

Understanding Liability Coverage

There is a chance that the condo master policy includes some form of liability coverage. However, that coverage is likely limited to common areas. For example, covering if somebody gets hurt while using the condo's swimming pool.

Unit owners should strongly consider adding liability insurance to their personal policy. This insurance helps to protect policyholders in the event that someone gets injured in their home. And liability insurance is far more important than one may realize!

If someone gets injured in your condo and they believe it is your fault, they can sue you over the matter. Even if you are eventually found innocent, the legal fees of going to a trial are too much for most people. This is why most of these claims are settled out of court.

But even the settlements aren't cheap. In fact, the average settlement amount for personal injury cases is a whopping $52,900!

Liability coverage helps to pay for the medical bills of the injured party. And if a case goes to trial, or if you need to settle, this insurance will pay for that as well. Ultimately, this is a far better alternative than going into major debt over a simple accident!

Cash Value or Replacement Coverage

When picking personal condo insurance, one must decide between policies that offer cash value and policies that offer replacement coverage. But what is the difference between these policies, and which one is better?

Basically, replacement coverage is just that. If something is destroyed or stolen (like your television), then the insurance carrier will pay to replace it with either the same model or an equivalent model.

Cash value coverage means that you will receive an amount equal to the current value of the destroyed or stolen item. "Current value" means that the insurance carrier will consider how old the item is and how its value has depreciated.

When it comes to protecting your property, replacement coverage is always better. But it is always more expensive as well, so you must find a balance between what you wish to protect and how much you wish to pay.

Do You Need Flood Coverage?

We've all seen terrifying news coverage of entire buildings being damaged or destroyed by floods. So when it comes to protecting your condo, you may be asking the big question: "do I need to add flood coverage?"

If your condo is located in a high-risk flood zone, then such insurance will be mandatory. Otherwise, flood insurance is a separate policy that you can get from your carrier on top of your personal condo insurance.

The government uses existing data to determine if an area is likely to flood. But weather patterns and climate change causes unexpected effects, including flooding in unexpected areas, you may want this coverage to achieve peace of mind.

Get the Insurance You Need Today!

Now you know more about the condo master policy. But do you know where to purchase a condo master insurance policy?  Or as a unit owner where to purchase a personal condo policy?

Here at Hummel Group, we specialize in protecting both you personally and your condo association.  We have both a personal risk team and a team of condo association specialists that can help get your property insured. To discover how we can best protect the most important things in your life, all you have to do is contact us today!