Explaining HOA Master Policies and Condominium Insurance

People who own condominiums usually pay for insurance through their homeowner association (HOA) fees. But the HOA master insurance policies do not actually provide coverage for condominiums. Instead, the insurance provided with HOA plans only give liability coverage and other protection for the commons areas.

The master insurance policy for an HOA protects all owners of condominiums for their collective liability. Although condo owners only own the actual condominiums in which they live, each has a collective responsibility for commons areas for legal and insurance purposes, such as the grounds, pool areas and exterior walls.

There are two types of master policies. One insures all real property from the exterior on into the building itself, including entryways, stairs and other commons areas. But it will not insure counter tops, fixtures and other property located within the owned unit. Condo owners who have HOA master plans of this type are most in need of comprehensive property insurance.

The second type is an all-in policy, which insures fixtures, additions and installations within the interior of the building’s walls as well as the floors and ceilings of individual condo units. People whose HOAs have such insurance policies are less in need of comprehensive property insurance protection than with the other type of master insurance plan.

Both types of the HOA policies likely have a deductible for which a condo owner would be partly responsible. Once a condominium owner knows which type of master insurance plan is in place, he or she can purchase the proper HO-6 policy to protect what is not covered by the master insurance policy.

When looking to insure a condominium and its contents, an HO-6 insurance policy is what protects condominium owners. Such policies generally come with a choice between actual cash value protection or replacement cost insurance coverage. Choosing the right one requires determining the value of the contents and personal belongings kept within the unit to see if replacement cost coverage or actual cash value protection would be best. Replacement cost coverage is the more expensive option but could be important for insuring the value of rare items, such as antiques and artwork.

Different insurance companies offer different types of HO-6 insurance policies to ensure condominium owners and the units themselves have sufficient protection as determined by the policyholder. When properly protected, a condo owner likely won’t suffer a financial loss if the unit or building is damaged or destroyed.