High-Rise Condo Insurance: What's Covered?

High-rise condominiums require a range of insurance policies to protect the interests of the condo association and individual unit owners. The condo association typically insures the common areas, the building's structure, and liability for the association. This may include bare walls or walls-in coverage, which determines whether the association's policy covers only the building structure or extends to interior fixtures and fittings.

Unit owners are generally responsible for insuring their personal property and any upgrades or improvements made to their units. This is usually achieved through an HO-6 policy, which covers the walls-in contents of the unit and includes personal liability coverage.

Condo insurance covers personal property and liability

Condo insurance is designed to complement the insurance policies of the condo corporation. While the condo corporation's insurance policy typically covers the structure of the building and common areas, the condo owner's insurance policy is designed to cover the interior of the individual unit.

Condo insurance covers personal property, including all movable items in your condo unit, such as appliances, electronics, furniture, clothing, and sports equipment. It also covers personal belongings stored in a separate storage locker. This is important because it protects you from underestimating the cost of replacing all your belongings.

In addition, condo insurance provides liability coverage, protecting the condo owner from lawsuits related to the condo. For example, if someone is accidentally injured or has their property damaged at your residence and sues you for damages, your liability coverage will help cover the costs.

Condo insurance also includes additional living expenses coverage, which provides funds for temporary accommodations and food costs if you are forced to leave your home due to a covered loss, such as fire or water damage.

The amount of condo insurance coverage you need depends on the type of master policy your homeowners' association carries. Experts recommend purchasing enough coverage to fully protect your personal property and personal liability. It is also recommended to have dwelling or building property coverage, with 20% of the unit's value as a good rule of thumb.

When it comes to liability coverage, the standard condo insurance policy includes $100,000, but experts suggest a minimum of $300,000. You can also purchase an umbrella insurance policy that provides additional protection of $1 million or more.

By understanding the specifics of your condo corporation's insurance policy and the coverage it provides, you can ensure that your own condo insurance policy adequately protects your personal property and liability.

HO-6 insurance covers walls-in contents

HO-6 insurance, also known as walls-in coverage, is a type of insurance policy for condominium or co-op units. It covers the "walls-in" contents of an individual unit, including upgrades beyond what is defined in the association's governing documents as the "standard unit". This means that HO-6 insurance covers everything from the finished surface of the "perimeter walls in".

HO-6 insurance is designed to complement the condominium or cooperative's master policy, which covers the building's common areas and structural damage. It provides protection for the unit's interior, personal property, and potential liability claims.

• Building property coverage: This covers the unit itself, including walls, floors, ceilings, and fixtures. It protects against damage caused by fire, weather (except hurricanes in some areas), theft, and vandalism.
• Personal property coverage: This covers the owner's belongings, such as furniture, electronics, clothing, and other movable goods. It reimburses the owner for stolen or damaged items, up to the policy limit.
• Personal liability coverage: This protects the owner from legal expenses and claims if they are held responsible for injuries or damage to someone else.
• Loss of use coverage: If the unit becomes uninhabitable due to damage or an evacuation order, this coverage reimburses the owner for additional living expenses such as hotel stays and food.
• Loss assessment coverage: This optional coverage helps pay for incidents related to the condo association, such as when the association's policy limits are exceeded or there are uninsured losses.

Master policies cover common areas

Master policies, also known as master condo policies or HOA master policies, are insurance policies held by a condominium's homeowners association (HOA). They cover common areas and the overall structure of the building.

Master policies cover the building's exterior, common areas, and shared amenities. This includes the roof, exterior walls, stairways, recreation rooms, elevators, common hallways, and grounds. The policy also includes parking lots, green areas, and walkways.

Master policies include two types of coverage: property insurance and liability insurance. Property insurance covers the condominium complex's physical structure, including walls, roofs, and shared spaces. This coverage comes into effect after common perils such as fire, theft, vandalism, and natural disasters.

Liability insurance, on the other hand, protects the condominium association in the event a person is injured in a common area. For example, if a visitor slips and falls in a common area, the liability insurance portion of the master policy would cover resulting legal and medical expenses.

It is important to note that master policies do not cover the interiors of individual condo units or residents' personal belongings. Coverage for these falls under a separate policy, typically an HO-6 policy, also known as a personal condo insurance policy.

Loss assessment coverage helps pay for incidents related to the condo association

Loss assessment coverage is an important aspect of insurance for condo owners, as it helps protect them financially in the event of incidents related to the condo association. This coverage is particularly relevant for high-rise condominiums, which often have multiple residents and shared common spaces, increasing the potential for losses or damages.

Loss assessment coverage comes into play when a loss occurs in an area covered by the association's policy, but there are still significant out-of-pocket expenses not covered by the association's insurance. In such cases, the association may assess the individual condo owners to help cover the remaining costs. Loss assessment coverage can help protect condo owners from these unexpected expenses.

For example, if a fire causes damage to the building's hallway and elevator, exceeding the association's policy limit, the remaining costs would be divided among the residents. With loss assessment coverage, your insurance company may cover your share of the assessment, protecting you from having to pay these costs out of pocket.

The amount of loss assessment coverage included in standard condo insurance policies varies. Some policies may include a limited amount of loss assessment coverage, typically around $1,000, while others may require you to purchase additional coverage. It is important for condo owners to review their policies and understand the extent of their loss assessment coverage. If necessary, they can purchase additional coverage, which can range from $10,000 to $100,000, depending on the insurer.

By having adequate loss assessment coverage, condo owners can have peace of mind knowing that they are protected from financial burdens related to incidents in shared areas or damages exceeding the association's policy limits. It is a crucial aspect of insurance for high-rise condominiums, where the potential for losses and the impact on individual owners can be significant.

Directors & Officers Liability protects board members and building staff from legal damages

Directors and Officers (D&O) Liability Insurance is a type of insurance that protects individuals from personal losses if they are sued as a result of serving as a director or officer of an organisation. In the context of high-rise condominiums, this type of insurance is particularly relevant for board members and building staff.

D&O insurance covers directors and officers if they are sued for alleged "wrongful acts", including breaches of fiduciary duty, errors, omissions, misleading statements, or misstatements. It can also cover the legal fees and other costs incurred by the organisation as a result of such a lawsuit. This is important because even if a board member or staff member is not at fault, a legal claim could cost far more than typical insurance will cover.

For example, if a board fails to adhere to bylaws, disputes architectural changes, or breaches vendor contracts, D&O insurance can provide financial protection. Additionally, D&O insurance can be combined with Employment Practices Liability coverage, which provides protection against claims of wrongful termination, harassment, and discrimination by employees and third parties.

The cost of D&O insurance varies depending on factors such as the number of units, the number of board members, and claims history. For condominiums with fewer than 50 units and a clean claims history, pricing for D&O insurance typically starts at under $1,000 for $1 million in coverage.

It is important to note that D&O insurance policies are not standardised, and the specific coverage may vary depending on the insurance provider. Therefore, it is crucial for board members and building staff to carefully review the terms and conditions of their policy to understand the extent of their protection.

Frequently asked questions