How to Review Your Condo Association Master Insurance Policy

In this post, we will discuss how to review your HOA or condo association master insurance policy. Whether you're evaluating your current master insurance policy or looking for a new one, here are the most important points of the policy that should be reviewed annually.

1. Each building's replacement cost. Make sure you factor in type of construction, year built, square footage, number of stories, and other features of your building. Building in an inflation factor to your master policy can help mitigate some of this, but the condo association should still review each building's value every few years.
2. Directors & officers coverage. Not all condo associations have this coverage. Considering its minimal cost, it is a wise investment to protect the interests of the board members of the condo association.
3. Employee dishonesty limit. This limit is usually equal to the amount of money the condo association has in the bank. This value should be regularly reviewed.
4. Sewer or drain back-up. Sewer and drain back-up actually happens quite frequently with condo associations, and this coverage would pay for the ensuing damages/repairs. Typically, this coverage must be added to the master policy and has limits of $25,000, $50,000, and $100,000.
5. Umbrella. This coverage kicks in when the limits of the general liability policy are exceeded. Umbrella coverage could be critical in the event a large claim is made over a drowning in the condo pool or an accident on the playground, for example. Usually, condo associations can purchase a $1,000,000 umbrella policy for about $500 per year.
6. Flood coverage. If you are in a flood zone, make sure you work with your insurance agent to get adequate flood coverage.
7. Earthquake coverage.
8. Wind coverage. This coverage might be included in your master policy, depending on where your condo or HOA is located. For buildings in Florida, Texas, the East Coast, or West Coast, you will probably have to purchase this separately. The price for this coverage is usually considerable because it pays for all wind-related damage, including hurricanes.
9. Wind deductible. If you have a wind deductible, it's important to find out if it is a per season or per occurrence deductible.
10. Your agent. Many condo associations assume that they are stuck with an agent, even if they don't feel he/she is competent or trustworthy. In reality, you can keep the same coverage with the same insurance company and switch agents.
11. Premium. Are you paying too much for your master insurance policy? If so, don't be afraid to look elsewhere for better deals.
12. Property deductible. Examine your deductible to see if it's too high or too low. You might be able to raise your deductible up to $1,000-$2,500 to substantially reduce your premiums.