A Guide to Condo Association Insurance Policies

By Michael Murphy

street view of a hi-rise apartment building

Many people find condominium living an ideal situation, as they can enjoy the benefits of ownership with the ability to rely on a condo association to maintain everything outside their home—including insurance.

More specifically, most homeowners’ associations, or HOAs, are responsible for procuring a master insurance policy that covers the property at large. While this sounds straightforward on the surface, there is often confusion around where condo association insurance ends and the unit owner’s condo insurance begins. Today, we will break it all down for you.

What is Covered in a Condo’s Master Insurance Policy?

Like any other structure, condo buildings are vulnerable to property damage from events like storms, fires, theft and vandalism. A typical condo association insurance policy, also known as master insurance, provides property damage and liability coverage for the structure, the common areas and the grounds.

Here’s how it works:

  • Structure: When it comes to the structure, there are three types of coverage that a condo association can choose from: bare walls coverage, single entity coverage and all-in coverage. With bare walls coverage, the association will cover the structure of the condo unit up to the drywall. This includes the exterior, framing, roofing, piping, wiring, insulation and the drywall itself. Single-entity coverage includes the items mentioned above plus certain built-in property, such as finishes and light fixtures. All-in policy coverage includes all real property in a residential condominium structure, including fixtures in individual units, appliances and any upgrades or improvements the owners make to the unit.
  • Common areas: The association’s master policy covers damage to shared spaces like hallways, exercise facilities, lobbies, pools, outdoor gathering spaces and parks, event spaces, elevators, parking lots, garages, walkways and general landscape.

In addition to property and liability insurance, the master policy should also include workers’ compensation to cover exposure associated with employed staff. This provides coverage for such roles as office and marketing staff, groundskeepers, maintenance, contractors and others.

What isn’t Covered in a Condo Association Insurance Policy

The owner of the individual unit is responsible for any coverage areas that are not included in the master insurance policy, such as:

  • Building property: Depending on the level of structural insurance stipulated in the master insurance policy, the condo owner will be responsible for the inside of the unit itself, including wall-, floor-, and ceiling-coverings, fixtures and appliances (in most cases), furniture, electronics and personal belongings.
  • Personal liability: The condo owner is also responsible for coverage that protects them from legal claims and expenses due to bodily injury or property damage that occurred on their property.

Is it Mandatory for a Condo Association to Maintain an Insurance Policy?

While condo association insurance isn’t always mandatory, maintaining an HOA insurance policy protects the association from unexpected and possibly disastrous losses while ensuring residents and guests are safe and happy. The rules established by the association will dictate which aspects of the condo complex should be included in the master policy vs. what should be covered by the owners’ policies.

Who Pays for the Master Insurance Policy?

The cost of a condo association insurance policy is included in the monthly dues that members pay to the association. Because condo owners are granted equal access to the facility’s common areas, they are also responsible for their equal share of the cost to insure them. Board members, however, are not exempt from paying their share of dues. Though they are volunteering to run the association, they are also homeowners; the same rules apply to them.

Condo Association Insurance Policy Experts in NJ

At Hanson & Ryan, we know that condo insurance can be tricky to understand and navigate. Our insurance agents will help you assess your association’s risk exposure and identify and procure the optimal coverage at the most competitive prices.

Contact our experts today for more information about condo association insurance.