What to Know When Choosing a Condo Association Master Insurance Policy

There are over 350,000 community associations in the United States. These associations oversee single-family developments and condominium communities.

Community associations have a lot of responsibilities, and they’re run by an all-volunteer board of directors. It’s up to the community association to clean common areas, maintain the property, enforce rules, and follow the rules and guidelines as a board.

Since a condo association handles so much within the community, it takes on a lot of risks. A person could fall at the community pool or a resident could disagree with a fine.

A condo association master insurance policy can mitigate this risk. That is if the association gets the right master insurance policy.

How can you make sure your condo association is protected? Read this guide for choosing insurance for condo owners associations.

Types of HOA Insurance Policies

There are generally two types of condo insurance policies. This is important for everyone to know, whether you’re a board member of the association or a new owner in the condo community.

A bare walls-in policy only covers the structure of the condo building. The foundation, walls, wiring, pipes, frame, and roof get covered.

As the name suggests, it covers the walls and anything in between the framing and drywall.

A more expansive policy is the all-in policy. This covers everything mentioned above, plus appliances and some fixtures.

This is important to know to resolve potential disputes between neighbors. For example, if a dishwasher breaks and floods the unit below, who would be responsible for the damages.

If the condo only has a bare walls-in policy, the unit with the dishwasher would have to cover the damages, unless it was due to a faulty pipe in between the walls.

The incident would get covered under an all-in policy.

Condo owners need to get personal insurance policies that cover items such as furniture and personal belongings. They may need to get additional coverage to cover appliances if the condo association only has a bare walls-in policy.

What Does a Condo Association Master Insurance Policy Cover?

The right condo association insurance policy can cover so much more beyond the structure of the property.

A basic condo owners association insurance policy should have property protection in case of fire, property damage, vandalism, and water damage.

Another big issue is the association’s liability. If there’s an injury on the common grounds of the property, the condo association faces a lawsuit.

Lawsuits also come from inside the homeowners’ community. A resident could disagree with a repair assessment and sue the HOA. They believe it’s not their responsibility, but the HOA’s.

These lawsuits can drain the association’s bank accounts. A solid master insurance policy covers legal and liability costs.

The members of the board can get named in these lawsuits. This is a common occurrence and puts the members’ personal assets at risk.

They have to hire attorneys and absorb the legal costs. A condo association’s policy might reimburse board members in these lawsuits, but they have to pay out of pocket first.

This is why a master policy has to include a Directors and Officers Liability policy. This protects members and officers who get sued in their work as board members.

Does your condominium have more than 20 units? You’ll have to get a fidelity bond.

This is a type of insurance policy that protects the association from fraud and theft. This is a requirement because of a few high-profile embezzlement cases in the past.

Additional Coverage Options

There are other things to consider when looking for condo association insurance.

The condo association may employ staff, such as a bookkeeper or maintenance crew. In that case, you need to have worker’s compensation insurance.

Business auto insurance is necessary if the condo association owns vehicles. This is common in large developments where the maintenance crew needs to get around the development quickly.

Flood coverage, cyber liability, and ordinance coverage policies should be considered.

Choosing the Right COA Insurance Policy

There’s a lot to consider when getting a master condo insurance policy. Start by assessing the needs of the condo association.

Review past insurance policies and see what was covered in the past. Look at all of the ways the condo association and board members assume risk.

Contact companies that specialize in condo association insurance. This is much different from an individual policy, and you need someone knowledgeable to make sure you get the right policy.

You can go through an independent broker or an insurance agent that works for a specific company. The advantage of working with an independent broker is that they can compare quotes from several different insurance companies.

A company agent can only sell insurance policies for that one company. You’ll have to contact different agents and get quotes from them individually.

Get at least three insurance quotes to review. Make sure all of your needs are covered in the policies.

You and your board shouldn’t go with the least expensive one. You need to make sure you have adequate protection at a reasonable rate.

Remember to follow the by-laws that govern the association to make the final selection. This ensures a fair process that follows the law.

How to Choose a Condo Association Master Insurance Policy

How can you choose a condo association master insurance policy? Assess the risks of the condo association and board of directors. Understand the different types of HOA insurance policies and get quotes from different vendors.

Always follow the by-laws of your condo association in selecting an insurance provider. You’ll end up with the protection and peace of mind you need.

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