Master Insurance and Walls-In Insurance for Condos: What are They, and What are the Coverage Differences?

Condominiums are a popular form of housing, especially in urban areas. As a condo owner, it is important to understand the different types of insurance available to protect your investment. Master insurance and walls-in insurance are two of the most common types of insurance for condos. In this article, we will explore what these two types of insurance are, and the coverage differences between them.

What is Master Insurance?

Master insurance is a type of insurance that is purchased by the condo association or homeowners association (HOA) to cover the common areas of the condo complex. This includes the exterior of the building, the roof, the hallways, and any other shared areas. Master insurance also covers any liability claims that may arise from common areas. Master insurance also fulfills lender requirements by providing replacement cost coverage.

What is Walls-In Insurance?

Walls-in insurance is a type of insurance that is purchased by the individual condo owner to cover the interior of their unit. This includes the walls, floors, ceilings, fixtures, and any other items that are part of the unit. Walls-in insurance also covers any liability claims that may arise from the interior of the unit. Walls-in is a lower coverage amount than its walls-out master insurance  counterpart and is required by all lenders. Since master insurance doesn’t cover interior liabilities, walls-in or HO-6 is required by all lenders when using a mortgage and almost always has a very small cost to the owner.

Coverage Differences

The coverage differences between master insurance and walls-in insurance are significant. Master insurance covers the common areas of the condo complex, while walls-in insurance covers the interior of the individual unit. Master insurance also covers any liability claims that may arise from the common areas, while walls-in insurance covers any liability claims that may arise from the interior of the unit.

Examples of Coverage

  • Master Insurance: If a tree falls on the roof of the condo complex, master insurance will cover the cost of repairs. It will also cover any liability claims that may arise from the incident.
  • Walls-In Insurance: If a pipe bursts in an individual unit, walls-in insurance will cover the cost of repairs. It will also cover any liability claims that may arise from the incident.

Conclusion

Master insurance and walls-in insurance are two of the most common types of insurance for condos. Master insurance covers the common areas of the condo complex, while walls-in insurance covers the interior of the individual unit. It is important for condo owners to understand the coverage differences between these two types of insurance in order to protect their investment.