In every condominium and co-operative and even townhome communities there is a master insurance policy. Each association requires a certain level of insurance. The Lender requires proof of this Master Policy . Further the coverage must be consistent with the legal requirements. The buyer’s lender has a form that is completed by the Home Owner’s Association regarding this policy. This master policy may not cover your personal loss. The master policy covers the common areas that owners share with others in the building like the roof, elevator, hallways and walkways for both physical damage and liability. If someone takes a tumble, the master policy provides coverage and if a lawsuit ensues, the master policy will also cover the legal costs incurred by the Home Owners Association.

If  unit suffers maximum damage, the master policy will bear the expense for the restoration of ceilings and walls. And then there are the grey areas: appliances. Sometimes a master policy will cover them and sometimes not. Remember the deductible and your HOA should know that figure.

But…read carefully…any improvements that previous owners or you have made will not be covered. I read this in my insurance brochure, the word is “betterments”. Wallpaper or  upgrades in the kitchen or bathroom are not covered. It is better to know this before you need to know this, right? The most common occurrences are the overflowing bath tub or shower. Tumbling water into the units below. The Master Policy will repair floors and ceilings…other items that were damaged like that hand woven Greek wall hanging, Persian rug or priceless  water color will lack coverage. For those items, you will need  your own individual policy. This insurance policy is known as an HO-6 policy. This gives you coverage subject to a deductible for your personal furniture, clothing and “betterments” in your unit.

Depending on your own financial situation, the HO-6 policy can also include such things as reimbursing you for monthly assessments and alternative lodging while you are unable to reside in your unit; water and sewer back-ups (which are all too common especially in older buildings); and even expensive jewelry, stamp or coin collections, or fur coats. You should be able to obtain this kind of policy through any insurance agent

Some associations require that every owner obtain the HO-6 policy, and many experts strongly recommended that every association make this a requirement.

I have read  that the best approach is to obtain that policy from the same carrier that issued the master policy.


The following is a great excerpt  from InmanNews:

“Take this very common situation: a common-element pipe burst, causing major flooding damage throughout the building, including in your unit. The condominium association files its claim against the master policy, and you file your claim with your insurance company. However, each company points it finger at the other one, stating that it is the obligation of the other carrier to cover the claim. Often, when faced with this situation, I merely tell both agents: "Guys, both the master and the HO-6 policy were issued by the same company, so why not just work it out on your own, and make sure that both the association and the owner are properly compensated for their losses?"

If you own a condominium unit, learn the difference between a unit and the common elements. Remember we often say a condo is the space, the area between the floors and the walls. Common areas are elevators, hallways, roof mechanical equipment, parking garage. And further, consider the  pipes that serve only your unit will most likely be considered part of your unit -- even though those pipes go down the walls outside of your unit.

It is important that you understand these concepts. Your association declaration will provide you with this information, but if you get confused with the legal (and architectural) terms, consult the association's property manager, its attorney or even the insurance agent for your building. It is absolutely critical for every owner to carefully read -- and reread periodically -- these legal documents.

If you are renting your unit, you probably will not need protection for your tenant's personal property. However, you still need coverage in case someone gets hurt in your unit, and accordingly should still obtain the HO-6 policy. And you should make it a requirement in your lease that your tenants purchase "renters insurance" -- called an HO-4 policy -- so that they too will have protection in case problems arise.

Damage to condominium units can come from many sources. The hot water hoses in your washer can burn out. Your fireplace chimney can get stuffed up, unable to provide the necessary updraft. Or the rubber seal under your toilet gets worn down.

One never knows when these problems occur. More importantly, disasters are often out of your control. The cost of this insurance is nominal, considering the risk and the exposure involved. "

I learned about the Insurance Information Institute Website from InMan News and found helpful information there as well as within Inman News.