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There are two types of deeds that are issued to each unit owner, the Unit Deed and the Master Deed. The Unit deed is merely a description of the particular unit that you exclusively own. It includes a description, boundaries and measurements of the rooms and unit. The Master Deed, on the other hand, applies to the condominium association as a whole.
The Master policy generally covers 2 different scenarios, Studs only versus All Inclusive coverage. Imagine that your condominium building burns to the ground and then is rebuilt. You open the door to your rebuilt unit, only to find subfloors, wall studs and ceiling joists. This would be a Studs only basis. If this was the case, you’d need to have sufficient building coverage on your condominium homeowners policy, form HO-6, to replace the inside structure (see our other blogs for a complete description of Policy type HO-6).Coverage would be needed to install finished floors and ceilings, wallboard, bathtubs, toilets, sinks, cabinets, counter tops, etc. If the Master policy included coverage on an All-in basis, then most or all of your unit’s building items would be covered, depending on the Master policy’s coverage.
In the Master Deed, there is usually an Insurance section, about 1 ½ pages long. It designates how the Master insurance policy, covering the building(s) and common areas will respond. It also will designate if structural coverage for the interior of your condo unit is also covered. There may be partial or full coverage for your interior unit, depending on the conditions of the deed. The insurance section usually has a clause that states that the Association will obtain and maintain a master policy, covering [blank} to the extent obtainable. This clause is extremely important as it protects the association . I have seen a couple of cases in which the Master deed stated that All-In coverage should be provided. However, the insurance company that provided the association with a Master policy, only offered Studs -only coverage. Furthermore, the unit owners were not aware of this!
My best advice? Call the agent or insurance company that handles the Master policy and obtain an exact coverage explanation from them!
For more information contact us at agordon.com. If you're looking into condos in the local area, check out our resources. And feel free to ask us any questions you have about condominium insurance.
Learn more about your condo insurance options and read another staff member's blog about condo insurance here.
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