What is Master Condo Policy?

A Master Condo Policy is an insurance policy held by a condominium’s homeowners association (HOA) that covers common areas and the overall structure of the building.

A Longer Definition: Master Condo Policy

A Master Condo Policy, sometimes known simply as condo association insurance, covers damages and losses to common areas of a condominium complex, including building lobbies, elevators, fitness centers, pools, and building exteriors.

Master condo insurance policies include two types of coverage: property insurance and liability insurance.

Property insurance under a Master Condo Policy covers the condominium complex’s physical structure, including walls, roofs, and shared spaces. Coverage applies after common perils like fire, theft, vandalism, and natural disasters.

The property insurance portion of a Master Condo Policy does not cover the interiors of any individual condo unit or any residents’ personal belongings. Those items are covered separately via an HO-6 policy, which is commonly known as a personal condo insurance policy.

Liability insurance in the Master Condo Policy protects the condominium association if a person is injured in a common area. For example, if a visitor slips and falls in the building lobby, a communal hallway, or the garage, the liability insurance portion of the Master Condo Policy would cover legal and medical expenses resulting from the injury.

Master Condo Policy: A Real World Example

Consider a scenario where a first-time home buyer purchases a condo in a well-maintained building.

The condominium’s homeowners association has a Master Condo Policy in place and healthy reserves. Then, during a heavy seasonal storm, strong winds damage the building and multiple balconies, including the balcony of the new owner’s unit.

The building suffers external damage, which is costly to repair, and the affected balconies require new railings and flooring. So, the condo association submits a claim to its insurance company under its Master Condo Policy.

The insurance company sends an adjuster to inspect the building, and after assessing the damage, agrees to pay full repair costs for the building and balconies.

Common Questions About Master Condo Policy

What does a Master Condo Policy cover?

A Master Condo Policy covers the building’s exterior, common areas, and shared amenities. It includes property and liability insurance for damages or injuries in these shared spaces.

Does a Master Condo Policy cover the personal property in my condo unit?

No, personal property within your individual condo unit is not covered by the Master Condo Policy. You would need to purchase a separate HO-6 insurance policy for this purpose.

Who pays for the Master Condo Policy?

The Master Condo Policy is generally paid for through the homeowners association (HOA) fees paid by the condo owners in the complex.

Does a Master Condo Policy cover damages within individual condo units?

Typically, a Master Condo Policy does not cover the interior of individual condo units, such as the floors or walls. Owners are usually responsible for insuring the inside of their own units.

What happens if someone is injured in a common area of the condo?

If someone is injured in a common area, the liability coverage in the Master Condo Policy can help cover medical expenses or legal costs that may arise from the incident.

How does a Master Condo Policy affect mortgage approvals for condo buyers?

Lenders require proof of a Master Condo Policy as part of the mortgage approval process. Mortgages for condos, like those for detached homes, cannot be approved without insurance on the structure.