Master Policy/Homeowner Insurance Hurdles

When condominium sites renew their current Association Master Policy with some adjustments, or when they obtain a new Master Insurance Policy, it is critical that they notify all unit owners of the changes.

A letter should be issued to assist with a contact for certificates of insurance and how to coordinate individual unit owner policies with the Master Policy.

The Master Policy typically covers all Common and Limited Common elements pursuant to the Condominium Bylaws, although there exists exclusions in the Master Policy coverage that should be considered when purchasing a homeowners insurance policy.

Unit Owner’s Policy
It is the Unit Owner’s responsibility to insure their own contents and personal liability. Additionally, homeowners are responsible for the Master Policy deductible. It is also strongly recommended that all Unit Owners purchase an “HO-6 Policy”. The Master Policy will have a deductible; therefore, unit owners should discuss the following with their insurance agent for the “dwelling” of their HO-6.

  • Please have your agent review the insurance section of the Bylaws of the Condominium Documents.
  • In case there is a loss which does not allow you to occupy your unit, you should consider obtaining “Loss of Use” insurance.
  • Should there be a claim that is not fully funded by the Master Policy’s insurance, you should consider obtaining “Loss Assessment” insurance. Please discuss this with your agent.
  • It is also recommended that Unit Owners speak to their Insurance Agent to include the HO-1732 endorsement, which broadens the perils insured under coverage A-Dwelling from “named perils” to “special form”.
  • It is recommended that unit owners making improvements and upgrades to their units (e.g. kitchen cabinets, expensive flooring, wall covering, fixtures, etc.) retain documentation of the improvements. It is important that documentation be kept so unit owners may recover replacement value.

Investor Units
Personal liability coverage and the deductible is the responsibility of each unit owner. This would include loss of rental income. We suggest that investors require their tenants to purchase an HO-4 tenant policy.

HO-6 Unit Owners Policy Exclusions and Limitations
There are some important policy exclusions or limitations that should be reviewed when unit owners are analyzing their own personal insurance requirements (i.e. Jewelry, Fine Arts, Business Property, etc.). In many instances, these exclusions or limitations can be modified or changed. Please note coverage and endorsements must be arranged through a unit owner’s personal agent!

The importance of insurance within a condominium cannot be stressed enough. It is important to be properly insured against all types of losses. The association should meet with an experienced commercial agent to discuss all types of liability and losses which may occur on their property. We recommend each owner sit down and speak with their own agent with a copy of the Master Policy insurance certificate to insure they are properly covered in the event of liability or a loss.

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