A Guide to Understanding Condo Master Insurance

Condo master insurance or master policy is a policy of insurance that covers the common area and property of a condominium. What is not covered by separate unit owner insurance policies, group insurance does cover and offers additional to the condo association. Both the condo boards, owners, and residents should understand what a master policy means to avoid such incidences in the future.

What is Condo Master Insurance?

A master policy is one purchased by the condo master, whether it’s the corporation or an association, to cover the buildings and structures that are common to all the unit owners. This category embraces items such as corridors, foyers, stairways, exteriors, roofs, basements, electrical installations, play areas, and many more. The master policy is also in force for the collective interest of the building owners.

So you may find yourself wondering: why is Condo Master Insurance important?

Condo master insurance is crucial for several reasons:

• Protection of Shared Assets: An interest insurance insures all physical objects that all the unit owners in the condo corporation have an insurable interest in – the structure with which is damaged.
• Liability Coverage: Condo policies provide the condo association with general liability coverage to cover all liabilities for lawsuits arising from mishaps or negligence in the common properties or as a consequence of structural flaws in the building.
• Peace of Mind for Unit Owners: The obvious benefit of having adequate master insurance is that unit owners have security knowing that shared assets and building structures are adequately covered by insurance. This also saves property values.
• Meeting Lender Requirements: Almost all mortgage lenders who finance units in condo buildings need the building to hold sufficient master insurance.

What Do You Need to Know About Condo Master Insurance?

Indeed, what exactly is included under a condo master insurance policy can vary from type of policy to type of condo association. However, most policies include the following key coverages:

• Property Coverage: Covers the common parts of the condo building, such as structure, roof, elevators, electrical and plumbing systems, lobby, corridors, exterior walls, and yard area. Includes events such as fire, flood, or wind damage. It may have coverage limits.
• General Liability Coverage: Provides for losses from incidental incidents in public space or due to negligence of building administration. It also addresses the issue of advertising liability, right to privacy, and libel concerning the condo corporation.
• Directors and Officers (D&O) Liability Coverage: Provides coverage to shield the board of directors’ individual property in case they are sued in any related to condo trade and choices. Pays for all the expenses incurred throughout the legal process and also may include any damages a party in litigation may suffer.
• Fidelity Insurance: Protection for financial losses of the association caused by the dishonest actions of the employees, which include embezzlement. Safeguards the financial capital of the corporation.
• Equipment Breakdown Coverage: If furnaces, electrical systems, boilers, or other equipment/systems develop a fault, then overhaul or replacement is necessary. Avoid special assessments.

Kinds of Condo Master Insurance Policies

Condo master insurance policies typically come in three main forms, each offering a different level of coverage:

• Bare Wall Coverage: The last common type of business structure, which is the simplest and least expensive. Pays only to the wall interior, in units/walls/flooring, but not owners’ improvements and additions. Shared assets are not covered.
• Single Entity Coverage: A more common type of policy. Combines condo corporations into one unit and insures exterior building facade, structural framework, parts of building owned by all, and negligence risks. Exclusions or limitations that may be attached to the policy include: Violations do not apply to individual units/upgrades.
• All-In Coverage: This is a master policy package containing a structure policy, liability policy, common area policy, and additional policies on inside units, such as fire, flood, and theft. It costs more, yet it offers more protection.

HO-6 Condo Owner Unit Insurance or Condo Association Policy

An HO-6 policy is specifically designed for condo owners and provides coverage for:

• Personal Property: Personal property accidental damage with coverage of furniture and other items inside your unit, your possessions and valuables, your clothes, and electronic devices.
• Interior Improvements: Improvements you made to the unit include Flooring, cabinets, and fixtures. Light body damage also includes expenses incurred in correcting interior walls and ceilings.
• Liability Coverage: This includes liability in connection with accidents involving visitors within your unit. Also includes unit damage that occurs to other units by mere protests or during the course of performing other tasks.
• Loss Assessment Coverage: Includes special levies imposed on all units by the condo corp to you to pay deductible amounts under master policy claims.

How to review your condo master insurance policy

When reviewing the policy, pay attention to the following:

• Coverage Limits: Monitoring policy limits by occurrence and class of business, such as equipment breakdown, liability, and directors’ liability. Ensure adequate.
• Deductibles: Check the deductibles where the insured provides a legal right to contribute towards the account clause by capping the amount available to pay per type of claim. Know what you’d owe.
• Exclusions: Know those situations where the company will not indemnify. The acquisition strategy should search for unusual exclusions that create gaps.
• Endorsements: Other enhancements further expand choices for insurance variation. The system should also present useful choices such as the flood/earthquake endorsements in some or many geographical areas.

Tips for Condo Associations

To ensure adequate protection and minimize risks, condo associations should consider the following tips:

• Regularly Review and Update the Policy: Engage in a full-scale check-up annually to address new exteriors, systems, assets, and regulatory changes at national, provincial, and municipal.
• Conduct Regular Risk Assessments: Walk through the building at least once a year to look for hazards and structural flaws that require repair to avoid future insurance losses.
• Maintain Accurate Records: It is crucial to maintain all service records, meeting minutes, and documentation that will testify about the building’s condition. This helps with claims.
• Communicate with Unit Owners: Inform owners on coverages, take questions, and give material so owners know the difference between master policies and HO-6 unit policies.
• Consult with Insurance Professional: To help insure your building, consult a commercial broker or agent who is knowledgeable about condo insurance.

Conclusion

Affordable condo master insurance, together with an adequate understanding of the insurance coverages, is vital to ensure that the joint extensive interests invested in several condos of a condominium corporation and its members are well secured. In keeping with a strategy for reviewing insurance policies and with the help of some tips, boards and unit owners can ensure their complex of adequate insurance coverage. A professional insurance advisor always makes it easier to deal with matters concerning condo insurance.