Searching for robust and affordable condo association insurance coverage? You’ve come to the right place. Honeycomb specializes in providing dedicated insurance that meets the needs of condo associations. Count on us for top-rated insurance at competitive rates, with simple policy management and superior customer care. With Honeycomb, you’ll find that it’s surprisingly easy to secure and manage your condo association’s insurance program!
What Does Condo Association Insurance Cover?
Condo association insurance can be broken down into two primary types:
- Property damage coverage provides coverage for associations if wind, hail, accidental water damage, fire or another covered peril causes damage to the building. Repairs can be very expensive, and many condos do not have the funds on hand to cover these costs out of pocket.
- Liability coverage provides coverage for associations in the case of a covered lawsuit. A common scenario involves a visitor who is injured on the property. This person may claim that the association was negligent, for example, by failing to fix a crack in the sidewalk or by not providing adequate lighting, and the association may be sued for medical bills and other related costs. Liability coverage provides important protection.
There are also other specialized coverages that can be added such as Director’s and Officer’s Liability Insurance to extend your protection.
What’s the Difference Between a Master Policy and an Individual Insurance Policy?
In a condominium setting, some property is owned by the individual unit owners, and some property is owned by the condo association. This division necessitates two types of insurance:
- The master policy is the condo association’s insurance policy. It covers the building structure, common spaces, amenities and other shared property. If these shared areas are damaged by a covered peril, such as fire, wind, hail or accidental water damage, the master policy will cover the claim, up to the policy limit. There is also coverage for third-party general liability claims, for example, if a visitor is injured on the property and sues. The master policy is typically purchased by the condo association and paid for by the condo association members through the collection of dues.
- The individual policy covers the individual units and the personal belongings owned by the individual unit owners. These policies can also provide third-party general liability coverage. Individual unit owners should understand that their personal property will not be covered by the master policy, so they need to purchase their own coverage.
Is Condo Association Insurance Required?
Condo associations are frequently required to purchase and maintain a master policy. To understand your insurance requirements, you need to consider two things: state and local law and your condo association’s bylaws.
State and local laws can vary, but condominium associations may be required to maintain a minimum level of insurance coverage. This helps protect the individual unit owners.
It is also common for a condo association’s bylaws to set minimum insurance requirements. Condo association board members should check the covenants, conditions and restrictions (CC&R) section to determine the insurance requirements.
However, even in the rare instance where condo association insurance is not strictly required, it is still a smart investment. Without sufficient coverage, an association may find itself in the position of having immediate expenses without the funds needed to cover them. This can threaten the financial stability of the association and result in higher costs for the members.
What Type of Condo Association Insurance Is Best?
Not all condo association insurance is the same. Although these policies typically provide coverage for property damage and third-party general liability claims, there can be significant coverage differences.
One critical issue is what kind of structural coverage the policy provides. Both the condo association and the individual unit owners need to buy condo insurance. This leads to the question, where is the line drawn between the shared property and the individual unit? Different types of policies draw this line in different ways.
There are three main types of coverage:
- Bare walls coverage provides the most limited coverage. Only the bare structure of the building is coverage. No fixtures, furnishings or other items are covered.
- Single entity coverage extends coverage to the original fixtures.
- All-in coverage provides the most comprehensive coverage. It covers all the fixtures, improvements and betterments.
When deciding which type of policy you need, refer to your association’s covenants, conditions and restrictions. Coordination is essential here because the type of master policy used will impact the type of coverage that individual unit owners need.
Do Condo Associations Need Any Other Types of Insurance?
It’s important to have coverage for property damage and third-party general liability claims, and a master policy can provide this. However, condo associations may need additional types of coverage as well.
Here are some coverage types to consider, either as a coverage add-on or as a separate policy:
- Workers’ Compensation Insurance: If your condo association employs workers, you may need workers’ compensation insurance in case an injury occurs.
- Directors & Officers Liability Insurance: Condo association board members may be held personally liable for their decisions and actions. D&O insurance provides important liability coverage.
- Flood Insurance: Condominiums in areas with flood risk may need a separate flood insurance policy.
- Earthquake Insurance: Condominiums in areas with earthquake risk may need a separate earthquake policy.
- Crime and Fidelity Insurance: This coverage provides protection against certain types of crime, including fraud and employee dishonesty.
- Ordinance and Law: This coverage add-on helps covers the additional costs that may occur if a building needs to be demolished or brought up to code after a property claim.
Why Choose Honeycomb?
Honeycomb offers fully customizable coverage for condo associations, allowing you to get the coverage you need to manage your risks without paying for coverage you don’t need. We’ve also made the process of buying insurance easy and fully transparent. You can get an online quote and instant coverage with unique discounts. Everything is online, giving you 24/7 access to quotes, policy forms and endorsements.