What your condo association's master policy leaves to you

A condominium is insured twice, by two different policies, for two different things. The association carries a master policy over the building. You carry a policy over what the master policy does not reach. The trouble is that owners are rarely shown where the boundary between those two sits.

It matters because the boundary is not standard. Master policies vary between buildings, and the line one association draws is not the line the association down the road draws.

Read the master policy first

This is the step that gets skipped, and it is the one that makes everything else work. Before a condo policy can be written sensibly, someone has to read what the master policy actually names.

Broadly, master policies fall somewhere on a spectrum. At one end, the association covers the bare structure and everything from the wall studs inward is yours. At the other, the association covers original fixtures and finishes as they were built, and only your improvements are yours. Those two produce very different personal policies.

We would rather see the document than guess at it. It is the difference between covering the gap you have and covering the gap a template assumed you had.

The three things your own policy is doing

Interior dwelling coverage handles what sits inside your unit that the master policy stops short of. Depending on the building, that can mean cabinetry, flooring, built ins, fixtures and any upgrades a previous owner made.

Personal property covers your belongings, which is the part most owners do think about. It is worth pricing what is actually in the unit rather than estimating, because furnishing a condo from scratch costs more than people expect.

Liability coverage answers when someone is injured inside your unit, or when something originating in your unit causes damage elsewhere. In a shared building that second scenario is considerably more realistic than it is in a detached house. A supply line letting go on an upper floor can reach several units.

Loss assessment, and the bill you did not expect

When a loss affects shared property, the cost does not always stop at the association. If the master policy's limits or deductible leave a shortfall, that shortfall can be passed to owners as an assessment.

Loss assessment coverage exists for exactly this, and it is a specific line worth discussing rather than discovering. In a coastal building with a meaningful wind deductible, the numbers involved are not trivial.

Flood is still separate

It bears repeating in this context, because condo owners sometimes assume the association's flood cover handles them. It covers the building's interest, on the association's terms. A ground floor or low rise coastal unit should have its own flood cover quoted on its own terms.

If you have a copy of your association's master policy, bring it in. Half an hour with that document is usually enough to tell you whether your own policy is aimed at the right gap.

Two words worth knowing on the master policy

When you read the association's document, you are looking for how it describes its own scope. All in, sometimes called all inclusive, means the master policy reaches into the unit and covers original fixtures and finishes as the building was constructed. Bare walls, sometimes called walls in or studs out, means it stops at the structural shell.

Those two produce very different personal policies. Under a bare walls master policy, your own interior coverage is doing a great deal of work, because the flooring, cabinetry, built ins and wall surfaces are all yours to insure. Under an all in policy, your exposure is narrower and centres on improvements and betterments, meaning anything you or a previous owner added beyond the original build.

Deductibles do not always line up

The master policy has its own deductible, and in coastal buildings the wind or hurricane portion of it can be a percentage of the insured value of the whole building rather than a flat sum. That figure can be large.

Your unit policy has a separate deductible that applies to your own claim. The two are not connected, and a single storm can put both in play. Understanding how they interact is part of setting your own limits sensibly, and it is a specific thing to ask about rather than assume.

Renting the unit out changes the answer

If the unit is a seasonal rental or an investment property rather than your residence, the policy has to be written for that. Occupancy affects both eligibility and how contents and liability are treated, and a policy written as an owner occupied unit will not respond the way you expect if the facts on the ground are different.