There are a number of ways condominium association insurance policy language can be written. Each is a response to the language of the specific community’s governing documents (CC&R). While not technically insurance terms, these terms have been accepted as descriptions of the different types of insurance a condominium association must purchase with respect to the property on the interior of a residential unit. Note that what follows does not encompass all of a condominium unit owner’s exposure to loss. Owners are advised to contact an insurance professional regarding the purchase of a condominium unit owners policy (HO-6) to address other exposure, such as personal property, loss of use, personal liability, and loss assessment.

All-Inclusive
Sometimes called “All In” or “Walls In, Including Improvements” coverage, this type of policy provides coverage for the residential building. In addition, imagine picking the building up and flipping it over. This type of policy provides coverage for everything that stays stuck inside. Included in the coverage would be floor coverings, wall coverings, cabinets, countertops, and other fixtures as originally installed. Coverage would extend to those fixtures that have been replaced or upgraded from the original installation.

Walls In with Exclusions
Some CC&R allow for the exclusion of certain types of interior finishes. Most commonly, that’s the exclusion of floor, wall, and ceiling coverings. This type of policy is walls in, meaning it provides coverage for damage to cabinets, countertops, and other fixtures. It also provides coverage for damage to walls (i.e., dry wall), but does not provide coverage for wall texture, paint, or wallpaper. Similarly, the policy provides coverage for concrete or plywood subfloor, but does not provide coverage for carpet, tile, hardwood, or other floor coverings.

Single Entity
This type of policy is also known as “Walls In, Excluding Improvements and Betterments.” Just like the all-inclusive type of policy, this policy provides coverage for the residential building and attached interior fixtures. The difference, however, is that coverage only extends to the original fixture, or a fixture similar to that of the original installation. For example, a condominium unit was constructed with carpeted floors, but a current or previous owner has replaced those floors with hardwood. In the event of a covered loss, the insurance carrier will provide the cost of repairs as if carpet was being installed. The owner would be responsible for the additional cost to replace the hardwood floor.

Bare Walls
As you may surmise by the title, coverage with this type of policy is limited. The policy still provides coverage for the residential building. But, if we imagine picking the building up and flipping it over, all items that stay stuck inside are excluded. That means, the owner is responsible for insuring all floor coverings, wall coverings, cabinets, countertops, and other fixtures.

Hopefully these short descriptions help you the next time you are asking, “What kind of insurance does our HOA have?”

Michael Berg, MBA, CIRMS, CMCA, EBP is Owner of Berg Insurance Agency and can be reached at michael@berginsurance.com