Condominium Association Insurance: What You Need to Know

Managing a condominium community can be incredibly rewarding, but it also comes with its fair share of challenges. One of the most critical aspects of condo management is making sure that the entire property and its residents are properly insured. Whether you’re on the board of a condo association or a property manager in Texas, understanding the ins and outs of this type of insurance is vital to protecting your community from unexpected events.

In this post, we’ll walk you through the basics of condominium association insurance, commonly known as condo master insurance. From what it covers to why it’s essential for your Texas community, we’ll cover everything you need to know.

What is condominium association insurance?

Also known as condo master insurance, this policy is designed to cover the common areas and shared property of a condo complex. This insurance is crucial because individual condo owners’ policies typically cover only the interior of their specific units, leaving common areas and shared infrastructure potentially exposed to risks.

The association’s insurance policy will vary based on factors like location, the size of the property, and specific risks. In Texas, where unpredictable weather and other unique challenges can occur, having a well-tailored condo association insurance policy can be the difference between recovery and financial disaster.

Why is it important?

Condo associations are responsible for maintaining common spaces and structures shared by all residents. These can include:

• Building exteriors (e.g., roofs, walls, and foundations)
• Landscaping
• Shared amenities such as pools, gyms, or community centers
• Hallways, elevators, and staircases
• Parking lots and garages

Without adequate insurance, any damages or liabilities related to these areas could be financially devastating for the association and, by extension, the residents. For instance, imagine a severe storm hitting your Texas condominium complex and damaging the roof. Without proper coverage, the association would be on the hook for costly repairs, and each resident might face steep out-of-pocket expenses.

Additionally, some lenders require a condo association to have insurance in place before they will approve mortgages for individual unit buyers. Having a strong policy ensures that your community remains financially secure, while also protecting property values.

What does this policy typically cover?

A standard condominium insurance policy generally includes the following types of coverage:

Property Insurance — This covers the physical structures of the condo, such as the building’s exterior and shared spaces. In Texas, this type of coverage is especially important to protect against events like hailstorms, hurricanes, or even tornadoes.

General Liability Insurance — If someone is injured in a common area, like a hallway or parking lot, condo association insurance provides liability coverage to protect the association from lawsuits. This is essential in preventing the association from having to pay out large sums in settlements or court costs.

Directors and Officers (D&O) Liability — Condo board members often make important decisions on behalf of the community. D&O liability insurance covers legal fees and settlements if a board member is sued for decisions made while performing their official duties.

Crime and Fidelity Coverage — This aspect of the insurance covers theft or fraud committed by employees, board members, or even contractors. It ensures that the association’s funds are protected in case of dishonest acts.

Workers’ Compensation — If your Texas condominium employs staff to handle maintenance or administrative tasks, workers’ compensation insurance is essential. It provides coverage for medical expenses and lost wages if an employee gets injured on the job.

Flood and Earthquake Insurance (Optional) — While not included in standard condo association insurance policies, flood and earthquake insurance are often necessary depending on your location in Texas. Consider adding these if your condo community is located in a high-risk area for floods or seismic activity.

Condo master insurance vs. unit owner’s insurance: what’s the difference?

One of the most common questions we get from Texas condo associations is about the distinction between condo master insurance and individual condo owner policies. In simple terms:

• Condo master insurance covers the common areas and exterior structures of the condo community.
• Individual unit owners are responsible for insuring the interiors of their units, personal property, and liability within their own homes.

This division of responsibility ensures that both the association and the individual unit owners are protected from potential risks. It’s crucial for condo associations to make sure residents are aware of this distinction so they can purchase appropriate individual policies, often called HO-6 insurance.

How to choose the right condominium association insurance for your Texas community

Choosing the right condo association Insurance policy requires careful consideration. Here are a few key steps:

1. Assess your property’s needs — Every condominium community is different. A small complex in a quiet suburban area might have different insurance needs than a large high-rise building in a bustling city. Conduct a thorough assessment of your property’s assets, infrastructure, and risk factors.
2. Work with a reputable insurance broker — Insurance can be complex, especially for condo associations. A knowledgeable insurance broker—particularly one with experience in the Texas market—can help tailor a policy that fits your community’s specific needs.
3. Review your policy regularly — Once you’ve secured your insurance policy, it’s important to review it annually. Circumstances change, and so should your insurance. For example, if your association adds a new swimming pool or renovates a shared space, make sure your policy reflects those changes.

Protect your community with McKnight Insurance

Now that you understand the essentials of condominium association insurance, it’s time to take action. Don’t wait until disaster strikes to realize you’re underinsured. Whether you’re new to condo management or simply reviewing your current policy, McKnight Insurance can help you navigate the complexities of Condo Master Insurance.

At McKnight Insurance, we specialize in helping Texas condominium associations find the right coverage to protect their communities. Contact us today for a personalized quote and ensure that your condo association is fully protected.