Master Condo Insurance – Learn The Basics
A Master Condo Insurance policy is needed by any Condominium Trust or Condominium Association in order to cover the building(s) and the liability of the Condo Association or Trust. A Condominium Association or Trust’s bylaws will dictate the levels of coverage and any extra coverages that are required to be on the policy.
The Basics Of A Condo Master Insurance Policy
Below are a list of some coverage’s that are available on most master condo insurance policies and a brief description of what they cover. This is for information purposes only. All, some, or none of these coverage’s may be on your current policy. If you have a question about your current policy please call the agency.
- Liability Coverage – This is the amount of liability coverage that a condo association or trust is insured for. Typically, this limit is a split limit of 1 million I 2 million, but, can be increased. The split limit means that the insurance company will payout a maximum of 1 million per occurrence and a maximum of 2 million in any given policy term.
- Building Coverage – This is the coverage that is placed on the condo building. This is the maximum amount that the insurance company will payout for any property loss to the building. For example, if your building is insured at 500K and it was to burn down, the maximum amount the insurance company would payout, if they paid the claim, would be 500K.
- Deductible – The deductibles typically available on a master condo policy are $500, $1000, $2500, $5000, and $10000. The higher your deductible is the lower the cost of the insurance policy.
- Wind/Hurricane Deductible – Sometimes if a condo is in close proximity to the water a company will add a separate deductible onto the policy. This is usually in the form of a percentage. For example, you may have a 1 %, 2%, 5%, 10% or more wind/hurricane deductible on your policy. A hurricane deductible will apply only if a loss occurs due to a named hurricane. A wind deductible will apply in the event that a loss occurs due to wind, regardless of it being a hurricane or not. For example, if you have a 2% hurricane or wind deductible on your policy and your coverage A limit on the building is $800,000; the deductible would be $16,000 (2% of $800,000).
- Ordinance & Law Coverage – Ordinance & Law coverage is to protect your building against changes in codes, laws and ordinances in the town or city where you live. In the event of a loss, there could be things that need to be upgraded to conform to the codes or laws of the city and having coverage for those issues is dependent on having ordinance and law coverage on the policy. Especially for older buildings, this coverage can be very important to have.
This coverage is split into three parts:
- Loss to Undamaged Portion of Building
- Demolition Cost
- Increased Cost of Construction
- Directors & Officers Coverage – This coverage helps to protect the trustee’s of a condo association from being sued. This is available on most policies for an additional premium.
- Flood Coverage – Flood coverage is not typically covered on a master condo policy. In most cases the condo association or trust must purchase a separate flood insurance policy to have this coverage.
- “All-In” Coverage Endorsement – This means that if there were a property loss and the entire building needed to be re-built the insurance company would re-build the inside walls and fixtures of the condo. Without this endorsement the coverage is generally subject to the bylaws set forth by each individual condo association or trust. This endorsement is only available on some policies, not all companies offer this. For more information regarding this particular endorsement please contact us directly.
- Earthquake Coverage – This coverage will cover damage to your building in the event of an earthquake.
- Back Up of Sewer or Drains, or Sump Overflow – This coverage will pay for the loss or damage to building caused by or resulting from:A. Water which backs up through sewers or drains;
B. Water below the surface of the ground including water that exerts pressure on or flows, seeps, or leaks into a building, foundation or other opening.
- Extended Replacement Cost (25%) – This endorsement can sometimes be added onto a master condo policy to extend the building coverage beyond the current limit on the policy. For example, if you have coverage on the building at 500K with this endorsement and the building were to burn down for a covered claim the company would pay out up to 625K. The building must be insured at 100% of the replacement cost in order for this endorsement to work.
- Guaranteed Replacement Cost – This endorsement can sometimes be added onto a master condo policy to extend the building coverage beyond the current limit on the policy. For example, if you have coverage on the building at 500K with this endorsement and the building were to burn down for a covered claim the company will pay up to any amount to rebuild the building. The building must be insured at 100% of the replacement cost in order for this endorsement to work.
- Fences – Fences are generally covered only for fire, lightning, explosion, riot or civil commotion or aircraft. On some policies they may also be covered for damage from automobiles.
- If you have detached structures such as a garage or shed on the premises they should be listed separately on the policy.
If you need a condo master insurance quote, don’t hesitate to reach out to one our friendly reps today! We proudly insure condo owners in Greater Boston and throughout more of New England as well.