{"id":1975,"date":"2022-01-21T11:00:00","date_gmt":"2022-01-21T16:00:00","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=1975"},"modified":"2024-04-25T23:19:21","modified_gmt":"2024-04-26T03:19:21","slug":"the-master-policy-versus-individual-homeowners-coverage","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/the-master-policy-versus-individual-homeowners-coverage\/","title":{"rendered":"The Master Policy Versus Individual Homeowner\u2019s Coverage"},"content":{"rendered":"\n
\"Wide<\/figure><\/div>\n\n\n\n

Know Your Condo Insurance<\/em><\/strong><\/p>\n\n\n\n

Condo insurance is a necessity. As a condo buyer, you\u2019ll get a condo insurance policy, and the payments will likely be pulled from the escrow account established for your mortgage account. This way, the value of the real estate (and your lender\u2019s stake in it) asset is covered against damage. Your homeowners\u2019 association (HOA) may require a copy of each unit owner\u2019s insurance to keep on file in the condo office as well.<\/p>\n\n\n\n

It\u2019s easy enough to get a standard HO-6 (condo) policy from any major company. Still, it\u2019s good to know what you\u2019re actually getting, and what else is available. Here are some points to consider.<\/p>\n\n\n\n\n\n\n\n

The HOA Will Already Have Coverage Through the Master Policy.<\/strong><\/h2>\n\n\n\n

A portion of your monthly Homeowners\u2019 Association (HOA) fees go to its master policy<\/em> insurer. The exterior property and common elements are collectively owned by all unit owners. Therefore, the master policy exists to cover things that impact the entire property. An example is liability for someone who got hurt when using a common amenity. Another example is storm damage that impacts the roof over multiple units. In these cases, the master policy may be tapped for the costs.  <\/p>\n\n\n\n

Master policies vary. You might have heard the terms \u201cbare walls\u201d or \u201call in.\u201d Let\u2019s break down the terminology:<\/p>\n\n\n\n

Bare-walls master policy:<\/strong> This means the master policy covers damage as far as the drywall, but not inside it. You\u2019ll be covering the floor and wall coverings, plumbing and sinks, cabinets, lighting and fixtures and personal belongings through your individual HO-6 policy. In industry jargon, you\u2019ll be covering all the \u201cwalls-in\u201d items. Claims can be made only for common kinds of damage listed in the policy. If you\u2019re buying a condo in an area subject to specific disasters such as wildfires or earthquakes, ask your insurance agent for guidance to help guard your assets against these destructive events.<\/p>\n\n\n\n

Walls-in master policy:<\/strong> This master policy covers basic interior damage. It may protect your floors, cabinets and counters, plumbing and electrical fixtures. Your individual owner\u2019s policy protects the custom upgrades you install. You may also hear this referred to as single-entity<\/em> coverage or studs-in<\/em> coverage.<\/p>\n\n\n\n

All-in master policy:<\/strong> This all-inclusive<\/em> master policy offers the broadest protection inside and outside the condo units. It covers installations and additions to the interior surfaces of a unit\u2019s walls, floors, ceilings, cabinets and sinks, appliances and light fixtures, and even the improvements made by the condo owner.  Even with this all-inclusive master policy, the unit owner will still need to purchase personal property insurance.<\/p>\n\n\n\n

The Unit Owner Gets an Individual Condo Policy.<\/strong><\/h2>\n\n\n\n

After you identify the type of coverage your master policy provides, you have a good idea of the type of condo owner\u2019s insurance, also called HO-6 insurance, that you\u2019ll need to buy. (Regular houses have HO-3 policies, while condos or co-ops<\/a> have HO-6 insurance.) The HO-6 insurance generally covers loss of property and liability for legal action arising within the individual condo unit.<\/p>\n\n\n\n

The annual policy cost could be anywhere from about $300 to $1,000 or higher. The cost depends on location and various other factors, such as the type of construction and age of the association\u2019s infrastructure. Bundling homeowner\u2019s or condo owner\u2019s insurance with car insurance can usually save a few dollars for the policy holders.<\/p>\n\n\n\n

Pro tip: <\/em><\/strong>Before buying a condo and paying for your insurance, you can speak with the condo property manager to ask what is considered standard at your property. The HOA governing documents also contain direction, based on state law, on required insurance coverage. Your insurance company\u2019s local agent can offer guidance as to the amount of liability, dwelling, and personal property coverage you need.<\/p>\n\n\n\n

To get into a bit more detail, let\u2019s take a tour of the elements of coverage the typical condo buyer might need.<\/p>\n\n\n\n

Personal property coverage:<\/strong> You\u2019ll at least need coverage for your own belongings, which the association won\u2019t cover in case of damage or theft. The incident must be listed as covered in your HO-6 policy for you to make a claim. (And first you\u2019ll have to cover the loss yourself, up to the deductible amount.)<\/p>\n\n\n\n

You do have choices among personal property coverage types, at different price levels:<\/p>\n\n\n\n