Homeowners Association Master Policy
Condominium & Townhouse Homeowners Association Master Hazard Insurance Policy
Condominium and Townhouse Homeowner Association Master Hazard Insurance Policies typically include coverage for Buildings and Business Personal Property. Some critical coverage issues for condo association HOA insurance include:
Buildings Valuation – Your agent may suggest a Building Value as the basis of your insurance. The insurance company underwriter may utilize Marshall Swift Boech or similar software to confirm that the suggested building value meets the insurance company’s minimum insurance building value. If minimum insurance values are agreed, then the insurance company, if so requested, will agree to insure at the proposed building value and, if so requested, will also waive Coinsurance which is a major benefit. If Coinsurance is not waived, then having Coinsurance may lead to a claims payment penalty if your building is under-insured when a claim occurs. If Coinsurance is not waived and the insured building value is too low, (typically below 80%, but sometimes below 100% of actual construction cost) if a property damage claim occurs, then the claim will be paid using a Coinsurance Penalty formula which will only pay for a portion of the actual repair costs.
Straight Talk About Building Values – Agents typically offer to insure at a suggested Building Value. The insurance companies may agree to insure at the suggested Building Value, but, knowing that insurance agents are not contractors and are not architects, it is prudent and ultimately is the client’s responsibility to independently research the accurate construction cost for their buildings to make an informed decision as to how much Building Value they want to carry. We therefore recommend that an HOA Board Member or Architectural Committee Member periodically contact a contractor or architect as an independent sanity check on Building Values, particularly if the HOA consists of a single building or when buildings are located close together where a fire could jump to multiple buildings potentially causing a massive total loss. The client and agent should thoroughly consider Building Value and come to a “meeting of the minds” as to what Building Value to use.
Business Personal Property (BPP) – Business Personal Property includes common area or on-site office furnishings, artwork, exercise equipment and association-owned tools used to operate or maintain the association buildings or grounds. An inventory should be maintained. Business Personal Property should be insured at its full replacement cost value.