In addition to entryways, elevators, and hallways, a policy may also cover shared amenities, such as pools, fitness centers, and business centers. Whether a policy covers these types of shared spaces will depend on its terms and conditions (as will all of its other coverages).
What Types of Condominium Association Insurance Policies Are Available?
Condominium association insurance policies can be separated into three categories: bare walls policies, single entity policies and modified single entity policies.
Bare walls policies provide the most basic level of coverage. They typically only cover the essential elements of a building, such as its roof, walls, floors, and elevators. Some policies also cover plumbing and electrical systems, but not all do. If an association in Massachusetts has this type of policy, condo owners are responsible for insuring everything in their units, including all appliances, fixtures, flooring, cabinets, and wall coverings. They also must insure their own belongings.
Single entity policies usually cover the essential elements of a building and standard finishes inside the condo units. Standard finishes might include lighting fixtures, cabinets, appliances, flooring, and countertops that a unit comes with. If an association has this kind of policy, owners need insurance coverage for any upgrades they make to a condo and their possessions.
Modified single entity policies are sometimes called all-in policies. These policies often cover not only the essential building components and standard finishes, but also upgrades that condo owners make as well. If an association has this robust type of coverage, condo owners have minimal coverage needs. They might only need insurance for their personal belongings, as everything else may be covered by the condominium association insurance policy.
Is There a Limit to How Much Protection All-In Coverage Provides?
In general, condominium association policies that provide all-in coverage for improvements that unit owners make don’t have limits on their all-in coverage. As long as an improvement meets a policy’s requirements to be covered under all-in coverage, it’s usually covered for the full cost of the improvement. It normally doesn’t matter whether the improvement is an inexpensive light fixture or expensive hardwood flooring, or whether a unit has one or several upgraded features.
(These are only examples of upgrades that may be covered. Additionally, a few policies may be exceptions and place limits on their all-in coverage.)
What is the Difference Between “Policy Wording” and “Condominium Documents?”
In addition to offering bare walls, single entity or modified single entity coverage, condominium association insurance policies often further define their coverage for in-unit improvements as either “based on policy wording” or “per the condominium documents.” Almost all condominium association policies have one of these two phrases in their terms and conditions.
When coverage for in-unit improvements is “based on policy wording,” there is usually a statement somewhere within the policy’s paperwork that defines how improvements are covered. This statement may provide coverage for all in-unit improvements, no in-unit improvements or some improvements. The statement must be located to understand what level of protection is offered for upgraded countertops, flooring and other similar improvements.
When coverage for in-unit improvements is “per the condominium documents,” the condominium association policy deters to the condominium association’s documents. If the documents require that the association provides coverage for in-unit improvements, then the insurance policy will usually cover them. If the documents don’t state that the association must insure improvements, then the insurance policy likely won’t cover them. (In cases where documents are ambiguous, it’s best to assume the association’s policy won't provide coverage.)
To determine whether a “per the condominium documents” policy will provide coverage for in-unit improvements, the condominium documents must be located. There is usually a board member who has these documents. Alternatively, any company that the association outsources administrative duties to may have a copy of the documents.
How Can Associations in Massachusetts Get Condominium Association Insurance?
Condo associations in Massachusetts that need condo association insurance should contact a nearby independent insurance agent who specializes in condo insurance. An agent can show a condo association the different policies that are available in their area. The agent can explain the differences between each policy and help the association’s directors or board members select a policy that provides the level of coverage the association wants.
At Scotti Insurance, we realize making sure your condo association is properly insured is a major responsibility. It also can be difficult to discern what protections a specific policy offers. Let one of our experienced agents help your Massachusetts condominium association find the insurance it needs.