If you have to make an insurance claim, how do you know if you should file with your own condo insurance or your HOA’s master policy?

Owning a condominium brings unique insurance needs. When you purchase a condo, you’re buying interest in a property of homes. A Homeowners’ Association or condominium board typically controls the property. You own the walls around your home, and you pay fees to upkeep the grounds and amenities within the condo complex or building. This shared ownership of space can create gray areas when it comes to property damage, liability, and insurance claims.

What is condo insurance?

Condominium insurance, also referred to as HO-6 insurance, is similar to other types of homeowners’ policies. it covers any incidents that occur within the walls of your condominium. This includes damage to your personal property as well as liability insurance.

For example, someone slips on the kitchen tile in your condominium. They have to go to the hospital to get an X-ray. If they come to you for money for their expenses, your condominium insurance could pay for their medical bills.

Or, for example, you accidentally start a small fire in your microwave. You could submit a claim to your condo insurance to install a new built-in microwave.

Theft and personal property are also usually covered under your personal condo insurance. You want to ensure that your contents coverage is comprehensive and updated to fully insure all of the items in your home. 

Read: How Much Condo Coverage Do You Need?

What is the master policy?

Your building’s master policy is the insurance that your Homeowners’ Association or condo board holds. They will typically carry their own coverage to protect themselves against liability and other legal concerns.

The master insurance policy typically covers damages to the structure of the building and common areas. For example, a tree fell in the parking lot near your condo. Your HOA and their insurance are responsible for removing the tree and paying for repairs to the parking lot. Another example might be a broken furnace or AC unit, if multiple units in the complex share central air.

But, there are some gray areas. What if a leaky roof damages your ceiling and furniture? What if a tree falls into your window?

How do you know whether the property damage or liability falls under your insurance or your association’s master policy?

Below you’ll find the five steps to ensuring you appropriately approach your condo insurance and potential claims.

1. Request your building’s master policy.

When you move in, you want to request a copy of the master policy and association by-laws. This will help you understand what the HOA will and won’t cover under their own policy.

There are two key master policy distinctions: “all-in” and “bare-walls-in.”

All-in policies will cover some parts of your condominium unit, like appliances, plumbing, flooring, and electrical. For example, a pipe freezes and bursts in your apartment. An all-in policy means your association might pay for or split the cost for plumbing repairs.

Bare-walls-in policies don’t cover anything within your unit’s walls. Some policies will include electrical and plumbing, but most exclude everything within the four walls of your condominium.

Provide copies of the master policy to your personal insurance agent as well. This can help ensure they find the right policy to fully cover your condo.

Note: Be sure to thoroughly inspect the condominium association and insurance before buying. You don’t want to deal with a HOA that won’t assist you in case of damage or injury.

2. When submitting a claim, consider the damage and cause.

If something occurs, there are two factors to determine who is responsible to pay: the property damaged and the cause of loss.

What property was damaged? Was the damage inside or outside your condo? If it’s within your condo, it’s likely your responsibility. If it’s outside your front door, it may be your association’s master policy.

If the damage is in your condo but caused by structural or central concerns, like a leaky roof or broken AC, then it’s time to look at the cause of loss.

The same goes for liability. If someone trips in your home, you are liable. If someone trips on the stairs leading to your home, the master policy takes over.

What caused the loss? Was it a fire, flood, collapse, or storm? If it was caused by a poor lack of maintenance by the association, they will likely be responsible for damages.

If it was caused by a storm that didn’t impact other units, you might be responsible. However, if the storm impacted everyone’s units, your association may have a structural problem and might be responsible for those claims.

3. Consider the coverage of both policies.

When looking at the cause of loss, you should also consider the differences in coverage. For example, a flood damaged your condo. Most HOA insurance policies do not include flood insurance. Thus, the responsibility of that financial burden would likely fall to you and your insurance company.

You’ll also want to consider the deductible of your building’s master policy. Most associations hold a $5,000 deductible. If your damage is less than or around $5,000, it might not make sense to make a claim with your association. You may have to pay that cost anyway (unless the HOA agrees to pay the deductible).

It’s important to note that some buildings purposefully choose a high deductible to minimize the number of claims they receive. A frequent number of insurance claims raises their premium cost drastically. Associations want their condo owners to submit as few claims as possible to minimize the HOA’s insurance premiums.

Ask your building what their deductible is so you can understand how much you would have to pay out of pocket if submitting a claim through the building policy.

4. Purchase insurance accordingly.

Take a look at your building’s master policy. Consider the deductible and coverage. If the deductible is high, you might want to add more coverage to your personal condo insurance.

Also take a look at the coverage. What will the master policy cover? If you live near a river and your building doesn’t hold flood insurance, you’ll want to hold flood insurance yourself to avoid a future concern. 

Read: Condo insurance You Need That Your Condo Association Doesn’t Cover

5. Ask about discounts.

Condominium associations often have a number of amenities that might get you a discount on your HO-6 insurance. For example, if you have a gated community or protective systems like burglar and fire alarms, your insurance company may offer you a “safety” discount.

Ask your insurance agent if you can receive any condo-related discounts. The less you pay on your condo insurance the better!

Bottom Line

There can be gray areas when it comes to determining liability and responsibility in a condo complex. Make sure you have full documentation of your building’s master policy when purchasing condominium insurance so your agent can ensure you are fully covered and protected no matter what.

Could you be saving more on your condo insurance? Call one of our insurance advisors at (844) 522-0543 for your free comparison quote to see how much you can save.

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