Questions to Ask Your HOA Before Obtaining Condo Insurance

When moving into a new condo, it is important to become familiar with the master insurance policy of the Home Owner’s Association (HOA) of your condominium before purchasing an individual condo owner’s insurance policy.

The HOA’s master insurance policy is like a homeowner’s insurance policy for the entire building, covering all aspects of the building structure and communal areas up to the point that individual condo owner’s insurance plans kick in. The outer walls, hallways and entryways, terrace or courtyard, pool, business lounge and more all fall into this category. Individual condo owner’s insurance plans, on the other hand, provide personal property protection for the majority of the policyholder’s belongings if damaged or destroyed due to an insured disaster.

Most condo owner’s insurance plans also provide policyholders with additional coverage features that are automatically included in a package plan or that can be added to your policy for an additional fee. It is essential to understand what other types of coverage your condominium’s HOA master plan includes for you once you pay into the program to avoid buying unnecessary insurance coverage through your individual condo owner’s insurance policy. To find out everything you may need to know about your condominium’s master insurance plan, you may want to ask your HOA a few of the questions outlined below.

Does the HOA master plan offer studs-out coverage or all-in coverage protection for insured disasters?

Most HOA master insurance plan’s offer studs-out coverage. This means that everything behind, beneath or outside of each individual unit’s wall, window and entryway studs that is not covered by another unit’s coverage area is protected under the HOA plan. This is the most basic coverage plan available, taking care of any structural problems with the building outside of your unit. Problems with the building’s roof, elevator or parking lot would be covered in this policy, for example, but not your unit’s flooring or ceiling.

The second most common HOA master insurance type is all-in coverage. As the name implies, all-in coverage is more comprehensive than studs-out coverage and extends into individual units to provide protection for your cabinets, flooring, windows and other fixed features. Because an all-in master insurance plan coverage offers more protection for individual condo unit owners, building tenants can spend less on their own condo owner’s insurance policies.

Is guest liability coverage included in the master insurance plan? If so, how much?

Guest liability coverage protects you and the building owner from facing claim costs from a guest that is accidently hurt in any of the common areas of the condominium. Some guest liability coverage extends into condo owners’ units, as well, but many require you to purchase your own personal guest liability coverage for your condo unit, if desired. Find out what the coverage limit is to the building’s guest liability coverage per condo owner. If the coverage limit is relatively low, you still may want to consider investing in personal liability coverage through your condo owner’s insurance policy.

What coverage is included in the master plan beyond the basic?

Some HOA master insurance plans will include floor or water-back up insurance for individual condo owners, while other may offer extended coverage options or payment plans at a resident’s request. If there is a specific feature you would like to see in your plan, ask specifically if it can be added at a discounted price.

How much are the fees for each condo owner for participating in the mandatory HOA master insurance plan?

If you have yet to buy your condo and are still shopping around, compare the annual fees each condo owner has to pay to their HOA for master insurance plan coverage between different condominiums. Monthly premiums can range significantly, with average rates costing condo owners between $200 and $400 every month. Also don’t forget to ask how often you have to make these payments and if premiums remain stable for extended periods of time or increase annually.

What are the master insurance policy’s loss assessment costs for each condo owner?

Like any other insurance policy, your HOA’s master insurance plan can require beneficiaries to pay a deductible before coverage can kick in for repairs or replacement of communal property. Along the same lines, the master insurance policy can also have set limits that, if reached, will require each condo owner to make up their portion of the difference in cost. Also known as loss assessment coverage, your research about the out-of-pocket costs and coverage limitations of your HOA master policy could spur you to invest in a different type of individual condo owner’s insurance plan.

Can the HOA master insurance policy cover renovations in my unit?

Some relatively comprehensive HOA master plans include coverage for eligible unit upgrades that may increase the safety and security of the property or sometimes also the value of the property. Find out if there is any coverage whatsoever for upgrades to individual condo units.

What are the minimum coverage requirements for individual condo owners according to the HOA?

Many HOAs have minimum coverage requirements that residents must meet through their condo owner’s insurance policy. It is important to know early on if a condominium’s minimum requirements work for you to avoid having to pay non-compliance fees later on down the road. It is also a good idea to find out if there are any other requirements that the HOA has for condo owner’s insurance policies.

Are there any benefits to working with the same insurance provider?

Many HOAs negotiate group discounts for package condo owner’s insurance policies for building tenants. These packages are compliant with whatever HOA regulations are in place in the building are generally include extras like personal liability coverage. Don’t forget to ask if there is any drawback to not choosing this insurance provider as well, such as more expensive processing fees with other providers or something similar.

Can I see the financial statements for the HOA?

The financials of a condominium should be open to the public. Ask for a copy of their most recent financial report and give it a look. You don’t need to be an account to realize that spending a third of last year’s budget on replanting flowerbeds, for example, may not be how you want your HOA spending money. An HOA that does that not know how to manage money well will not be able to manage a condo’s master insurance policy well, either.

What is the master insurance policy’s claim submission method?

In many cases, the HOA of a building prefers to work directly with the master insurance plan provider and to submit all building or resident claims through their group. Some condominiums, however, may allow residents to submit claims to the master insurance plan provider directly, without HOA approval. Also inquire about the average time it takes for the insurance to offer payment for repair or replacement so that you know how long a damaged amenity could be out of commission if there was a problem.

Is my balcony covered by the HOA master insurance plan or my condo owner’s insurance plan?

Structures like balconies or terraces that are private to one condo can sometimes be the responsibility of the HOA and sometimes the responsibility of the condo owner. Find out whether your balcony falls under the auspices of the master insurance plan or if it should be included in your personal condo owner’s insurance plan.

Are there any situations that are explicitly not covered by the building’s master insurance plan?

Master insurance policies cover certain types of damage and loss in certain types of situations. Criminal or purposeful destruction is rarely covered, for example, and damage caused by flooding also usually requires additional insurance coverage. Find out if there are any other situations or nullifying conditions that would not merit master insurance plan coverage in an expected instance.

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