Condominium Association Insurance

A condo master policy insurance program is the coverage purchased by the condominium association to protect the building structure, common areas and (depending on the policy type) unit interiors. Master policies are generally structured as Bare Walls, Single Entity or All-In. Bare Walls covers only the building shell and common elements. Single Entity adds coverage for unit interiors as originally built by the declarant. All-In extends to the building, original interiors and owner upgrades. Your association’s governing documents and state law dictate which structure is required.

Understanding HO-6 vs master policy coverage is essential for every board member and unit owner. The master policy covers the building and common areas on behalf of the entire association. An HO-6 policy is purchased by each individual unit owner and covers personal property, personal liability, loss assessment and (depending on the master policy type) interior improvements and betterments. Together, these two policies provide complete coverage for the community. A mismatch between the two creates gaps and potential litigation risk.

Several factors are driving condo association insurance premium increases. Climate-driven catastrophic events have escalated reinsurance costs. Carriers are exiting certain states and property types, reducing competition. Water damage claims remain the leading loss driver for condominiums. And many buildings are underinsured because replacement cost valuations have not kept pace with construction cost inflation. A specialist broker can help your board identify strategies to manage these pressures.

Deductible responsibility depends on your association’s governing documents. Deductible allocation in a condominium association is typically governed by a provision in the Covenants, Conditions & Restrictions (CC&Rs) that transfers responsibility to affected or source unit owners. When this language is properly coordinated with unit owners’ HO-6 policies, the deductible can be covered under various provisions in the unit owner's insurance policy. HUB helps boards review and optimize deductible allocation strategies to reduce out-of-pocket exposure for the association and individual owners alike.

D&O insurance is essential for any condominium board. It provides critical insurance for condo board members, protecting volunteer directors from personal liability arising from decisions made on behalf of the association. This is especially important given rising premiums and special assessments, which can lead to homeowner disputes and litigation. Be aware that most D&O policies contain a standard exclusion for failure to maintain adequate insurance, so boards should document their procurement and valuation decisions carefully.

Many unit owners, particularly cash buyers and co-op shareholders, do not maintain HO-6 policies. This creates a gap that can leave the association exposed when a claim occurs. HUB’s Building Guard insurance monitoring program provides a systematic way to confirm unit owner insurance compliance, verify that governing document requirements are met and monitor policy renewals throughout the year.

Non-renewals are increasingly common in the condominium market. If your association receives a non-renewal notice, start the remarketing process immediately. A condo association insurance broker with strong carrier relationships can access markets that generalist agents cannot, including surplus lines carriers and program administrators focused on community associations. HUB’s national platform and deep market access help associations find competitive options even when coverage is difficult to secure.

Replacement cost valuations should be reviewed annually, with a third-party appraisal conducted at least every three to five years. Between appraisals, boards should increase coverage limits by 4 to 5 percent annually to keep pace with construction cost inflation. Underinsurance is a significant hidden risk: an estimated 80 to 90 percent of buildings may be undervalued on their policies.

A waiver of subrogation endorsement prevents the association’s insurer from pursuing recovery against individual unit owners after a covered loss. This is important because the master policy is funded by owner assessments and procured for the benefit of those owners. Without this endorsement, the carrier could seek reimbursement from a unit owner whose property was the source of a claim, creating conflict within the community. HUB’s specialists confirm that the proper endorsements are in place at every renewal.