What Is a Master Insurance Policy for a Homeowners Association?

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Owning a condominium has a lot of benefits, with a major one being common grounds and shared spaces. Part of ownership is paying homeowners association dues, which goes in part to the maintenance of these areas. Imagine having a pool and not having to clean it. Picture a lush green yard and never having to mow the lawn. Sounds great, right? However, in addition to the upkeep, there is the repair side of things. This is when a master insurance policy plays a big part in the protection of you and your homeowners association.

What Is a Master Insurance Policy?

A master insurance policy is designed to protect the homeowners association and condominium owners when damage occurs that’s beyond the responsibility of each separate owner. In other words, when an insurance claim or property damage occurs in common grounds or shared spaces, the master insurance coverage helps protect all the owners as well as the homeowners association.

What Does a Master Insurance Policy Cover?

When you purchase a condo, you own the interior walls that surround it and its contents. The same applies to your neighbors. So, what occurs when something happens to the space in between those walls? That’s when a master insurance policy comes into play.
A big part of condo living is shared spaces and common grounds. This includes areas used by all the owners, such as swimming pools, gyms, party rooms, walkways, parking lots, playgrounds, and other green areas. The other part of shared ownership is the structural aspect of a condominium complex.
There are two major areas of a master insurance policy. The first is the bare walls-in coverage which focuses on the bones of the building. This would include pipes, wiring, roof, insulation, drywall, and other exterior structures. The other area of focus would be permanent fixtures, built-in appliances, and installations.
A master insurance policy also provides liability coverage in case someone gets hurt while in these shared areas. An example of this would be if a visitor slips and falls in the condominium parking lot. The claim would be filed under the master policy as the lot is owned by all the owners of the complex.

Who Pays for a Master Insurance Policy?

Typically, the master insurance policy is paid out of your monthly homeowners association member dues. The cost of the coverage is evenly distributed amongst all owners. If the rates change, whether up or down, the savings or expense is shared. Even if you don’t use part of the common areas, you are still liable for it.
Let’s say you don’t swim so you don’t use the pool. Nonetheless, if someone were to get injured in the pool, you are still liable, so it is important to have the protection of a master insurance policy.

What Is the Difference between a Master Insurance Policy and Condo Insurance?

As noted, a master insurance policy for a homeowners association covers all shared areas and common grounds for damages and liabilities as outlined by the policy. Condo insurance only covers a particular unit and contents, as well as the liabilities associated to the unit.
For example, if someone were to slip in your bathroom, the claim would be made to your condo insurance, not the master policy. Another important thing to note is if the master insurance policy coverage limit is met, your condo insurance may be contacted to cover the rest.
Designed to protect you against financial hardships caused by accidents, perils, and other liabilities, a master insurance policy for a homeowners association provides peace of mind for condo ownership. Coverage differs between insurance companies and types of policies, so speak to your insurance agent to ensure you have the necessary protection between your condo insurance and the master insurance policy.

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