How does a condo’s master insurance policy affect your coverage needs?

Condo insurance differs significantly from traditional homeowners’ insurance because of how ownership is structured in condominium communities. When you purchase a condo, you buy the interior space while the association maintains responsibility for common areas and the building’s exterior. This division of ownership creates unique insurance considerations, especially regarding the master insurance policy. Residents of Skye At Holland and similar communities should know how their association’s master policy impacts their personal coverage requirements.

Coverage gaps

Master insurance policies generally fall into three categories, each covering different aspects of the property:

• Bare walls coverage: Protects only the structure itself, excluding fixtures, installations, and improvements inside individual units
• Single entity coverage: Includes fixtures and installations but excludes improvements and upgrades made by unit owners
• All-in coverage: The most comprehensive option, covering nearly everything, including upgrades, but still excludes personal belongings

Understanding which type your association maintains helps identify potential coverage gaps your policy needs to address.

Deductible concerns

Association master policies typically carry substantial deductibles, sometimes reaching $10,000 or more. In certain situations, individual unit owners might be responsible for paying this deductible if the damage originates from their unit. Your personal condo insurance should include coverage for:

1. Master policy deductible assessment coverage
2. Special assessment coverage for major repairs
3. Protection against liability claims if damage to other units stems from your unit

These protections ensure you won’t face unexpected financial burdens when claims occur.

Personal liability

While the association’s master policy covers common areas, it doesn’t extend personal liability protection to individual owners. Your policy must address essential coverage needs: Personal liability insurance protects you if someone is injured inside your unit or if you accidentally damage someone else’s property. Without adequate liability coverage, your assets could be at risk in a lawsuit following an accident in your unit.

Contents protection

Master policies never cover residents’ personal belongings, regardless of how comprehensive they might be. Your individual condo policy needs to include contents coverage tailored to your specific possessions. Consider creating a detailed home inventory with photos and approximate values of your belongings. This documentation is invaluable when filing claims and helps you purchase adequate coverage for high-value items like jewellery, artwork, or electronics requiring additional riders or separate policies.

Loss assessment

Condo associations occasionally levy special assessments against unit owners when insurance claims exceed the master policy limits or for uncovered losses. Loss assessment coverage in your policy helps protect against these unexpected costs. For example, if a visitor is seriously injured in the community pool area and sues the association for $2 million, but the master policy only covers $1 million, each unit owner might receive an assessment to cover the remaining amount. Your loss assessment coverage would help pay your portion of this assessment.

Understanding the interplay between your association’s master insurance policy and your condo insurance helps eliminate dangerous coverage gaps. Review your association’s declaration and bylaws carefully and consider consulting with an insurance professional familiar with condominium coverage to ensure complete protection for your home and assets.