Condo owners face unique questions about purchasing homeowner’s insurance because of the shared-space reality of their property ownership. Typically, buying a condominium requires membership in the homeowner’s association (HOA), which is governed by an elected but volunteer Board of Directors comprised of condo owners. The HOA often has condo property management help to collect monthly dues, provide contractors for landscaping and create the association budget. With the input of condo property management, the HOA generally purchases a condo master insurance policy that is funded by HOA fees. The master insurance policy often covers many risks to the outside walls and roof of the building but nothing inside the walls. As a result, condominium owners need to know the details of their condo insurance policy coverage or risk not being covered for specific needs. So, if you are wondering whether you need homeowner’s insurance if your HOA is under condo property management, the answer is generally yes.
What does condo property management expect a Condo Master Insurance Policy to cover?
Master insurance policies for condominium communities normally include liability and property coverage. Liability coverage is used to pay for legal or medical costs for lawsuits that are directed at the association. This coverage is needed, for example, if someone is injured in one of the condominium community’s common areas. Property coverage in an HOA master insurance policy shields homeowners against the event of damage to common property areas. Shared spaces include:
Roofs
Lobbies
Stairways
Elevators
Playgrounds
Clubhouses
Fitness centers
Swimming pools
Damages may be caused by a variety of issues including vandalism, flooding, fire or high winds. Many times master insurance policies contain exclusions that condo owners should be aware of. These exclusions can prove devastating if floods or earthquakes are not included in the master plan (commonly they are not) and a condo owner has not purchased his or her own separate coverage.
Types of Condo Master Insurance Policies
There are three types of condo master insurance policies. Single entity policies are the most common type of master policy purchased by HOA associations.
A. Bare Walls
Bare walls insurance coverage applies only to the “bare” structure of the condominium development including the building roof and exterior walls, fixtures, and furnishings that are jointly owned and shared by condo owners. Personal property that is collectively owned by the HOA is also covered.
B. Single Entity
Single entity insurance policies protect common areas and cover individual condo units. Specifically, single entity insurance covers what was originally included in the condo when it was built, including appliances. These policies do not cover additions, structural improvements or any personal items.
C. All-Inclusive
All inclusive policies contain all the features of single entity coverage but also cover improvements and additions made inside a condo unit. Indoor structural elements including walls, flooring, fixtures, and cabinets are protected by these policies.
Determining Homeowner’s Insurance Policy Needs
Most HOA’s do not demand that owners buy their own insurance policy for additional coverage but it is highly recommended. HO-6 insurance policies have been specifically designed for condo unit owners and are very affordable. These policies include coverage for many insurance responsibilities that are not covered by a master policy, including:
The value of building additions, or modifications, that were paid by individual condo owners
Loss assessment should the condo owner incur a share of property damage or injury that is not covered by the HOA policy
Other damages sustained that are not covered under master policy
Personal property
The condominium bylaws should detail what parts of the property are covered by the master insurance policy. If the master policy is bare walls, for example, then you will want to purchase a policy that covers content and construction inside the walls. The question is not do I need Homeowner’s Insurance if my Condo is under Condo Property Management? The question is how much Homeowner’s Insurance do I need?
Son-Rise Property Management has been serving the property management needs of Bellingham and Whatcom County since 1996. Contact us today to see how we can help you find a rental property for your family or manage your rental properties.
