Glossary · 50 entries
HOA and Condo Insurance Clause Glossary. Plain English.
The clauses HOA and condo master policies and governing docs use most - bare-walls vs all-in coverage, loss assessment, fidelity bonds, D&O, ordinance-or-law, SIRS/reserves, and lender warrantability. For each: what the language actually says, what it means in plain English, and whether the clause is negotiable.
Compliance
Master Policy Valuation Basis (Bare-Walls, Single-Entity, All-In)
A condominium master policy defines what it covers inside each unit boundary in one of three ways. Bare-walls covers the structure and commo…
Limits
Replacement Cost vs. Actual Cash Value
Replacement cost value (RCV) pays to rebuild with materials of like kind and quality at current prices, with no deduction for depreciation. …
Compliance
Fidelity / Crime Bond (Employee Dishonesty)
A fidelity or crime bond protects association funds against theft or dishonest acts by anyone who handles them, including board members, emp…
Limits
Directors & Officers (D&O) Liability
Directors and officers liability covers board members and officers for claims arising from their governance decisions, such as an alleged br…
Limits
Commercial General Liability Limit
Commercial general liability covers the association against bodily injury and property damage claims arising from the common areas and its o…
Endorsements
Loss Assessment Coverage
Loss assessment coverage sits on the unit owner HO-6 policy, not the master policy, and pays a unit owner for a special assessment the assoc…
Endorsements
Ordinance or Law Coverage
Ordinance or law coverage pays the extra cost of rebuilding to current codes after a covered loss. Older buildings were built to older codes…
Endorsements
Equipment Breakdown (Boiler & Machinery)
Equipment breakdown, historically called boiler and machinery, covers sudden mechanical or electrical failure of building systems such as el…
Specialty
Flood Insurance
Standard property policies exclude flood, so flood is covered separately, either through the National Flood Insurance Program (NFIP) or a pr…
Specialty
Wind / Hurricane Deductible
In coastal and hurricane-exposed states, the master policy usually carries a separate windstorm or hurricane deductible expressed as a perce…
Limits
Umbrella / Excess Liability
An umbrella (or excess liability) policy sits above the primary general liability, hired and non-owned auto, and often D&O policies, adding …
Compliance
Structural Integrity Reserve Study (Florida SIRS)
Florida requires a Structural Integrity Reserve Study (SIRS) for residential condominium buildings three or more habitable stories tall, und…
Compliance
Current Reserve Study
A reserve study projects the cost and timing of major repairs and replacements, roofs, paving, painting, mechanical systems, and sets the re…
Indemnity
Additional insured (vendors / contracts)
When a vendor works on association property, a landscaper, a roofer, a pool service, a management company, the association wants to be named…
Compliance
Agreed Value / Coinsurance Waiver
A coinsurance clause is a condition inside a property policy that requires the insured limit to equal a set percentage (commonly 80, 90, or …
Indemnity
Indemnification of the board
Indemnification is a promise written into the association's own governing documents, usually the bylaws and sometimes the declaration, that …
Specialty
Builders Risk / Developer Turnover
While a community is being built or a building is being converted to condominiums, the developer (the declarant) carries builders risk cover…
Compliance
California balcony inspection (SB326)
California Civil Code section 5551, added by SB326, requires community associations with buildings containing three or more multifamily dwel…
Compliance
California Davis-Stirling insurance & D&O
For a residential common interest development in California, the Davis-Stirling Act (California Civil Code section 5800) gives a volunteer o…
Indemnity
CC&R Insurance Requirements
The recorded Declaration and the Covenants, Conditions, and Restrictions (the CC&Rs) are the association's own private contract, and they ro…
Specialty
Cyber Liability for HOAs
Cyber liability covers two exposures the standard association program leaves open. The first-party side pays the association's own costs aft…
Specialty
D&O Non-Monetary and Injunctive Claim Defense
Many governance disputes do not ask for money. An owner sues to force the board to hold an election, to stop enforcement of an architectural…
Specialty
Earthquake Coverage
Standard property and master policies exclude earthquake, so shake coverage is bought separately, either as a standalone earthquake policy, …
Specialty
Employment practices liability (EPLI)
Employment practices liability insurance (EPLI) covers the association, in its role as an employer, against claims brought by employees or a…
Compliance
Fannie Mae warrantability (insurance)
Warrantability is not a single coverage; it is the whole bundle of insurance conditions a project has to meet for a conventional loan on a u…
Compliance
FHA Condominium Project Approval (Insurance Conditions)
FHA project approval is what lets a buyer use an FHA-insured mortgage to purchase a unit in a condominium. Under the HUD Handbook 4000.1 / F…
Compliance
Fidelity coverage of the management company
When a management company handles the association's operating and reserve accounts, the fidelity or crime coverage protecting those funds ag…
Compliance
Florida 718 master insurance mandate
Florida's Condominium Act imposes a specific insurance duty on the association itself. Under Fla. Stat. 718.111(11), the association must us…
Compliance
Florida milestone inspection
The milestone inspection is a mandatory structural safety inspection of the load-bearing and life-safety elements of a building, distinct fr…
Compliance
Freddie Mac Insurance Requirements (Condo Project)
Freddie Mac imposes condominium master-policy requirements that closely parallel Fannie Mae's, because a condo unit backed by a conventional…
Limits
General Aggregate vs. Per-Occurrence Limits
A commercial general liability policy carries two different numbers on its declarations, and boards routinely read only the first. The per-o…
Specialty
HO-6 unit-owner policy (walls-in, betterments, loss assessment)
An HO-6 is the individual unit owner's policy, and it is the mirror image of the master policy's valuation basis. Wherever the master policy…
Endorsements
Inflation Guard / Valuation Adequacy
A replacement-cost limit is only as good as the number it was set to, and construction costs move. An inflation guard endorsement automatica…
Endorsements
Master Deductible Loss Assessment (HO-6 $1,000 Sublimit)
When the master policy pays a common-element loss, the association still owes the master deductible, and its governing documents usually let…
Compliance
Master Policy Deductible Cap (Fannie Mae 5 Percent Limit)
Fannie Mae limits how high the master property deductible can go. Under the Fannie Mae Selling Guide (section B7-3, Property and Flood Insur…
Compliance
Mortgagee / additional interest clauses
A lender that holds a mortgage on a unit wants proof that the association's master policy is in force, and wants standing to be told if that…
Limits
Named storm deductible
A named storm deductible is a separate, usually percentage-based deductible that applies only when the loss is caused by a storm the Nationa…
Specialty
Property manager professional liability (E&O)
Property manager professional liability, usually written as a management errors and omissions (E&O) policy, responds to a claim that the man…
Endorsements
Sewer / Drain Backup & Water Damage
Water is the most frequent property claim a community association files, and the coverage for it is not one line but several that interact. …
Specialty
Workers Compensation for HOA Employees
Workers compensation covers medical costs and lost wages when someone who works for the association is injured on the job, and in exchange i…
Limits
Actual cash value roof endorsement
An actual cash value roof endorsement carves the roof out of the master policy's replacement cost valuation and settles roof claims on a dep…
Limits
Blanket vs scheduled property limits
When a community has more than one building, the master property policy states its limits in one of two ways. A blanket limit is a single po…
Endorsements
Business income / loss of assessment income
Business income coverage on the master policy replaces revenue the association itself loses when a covered property loss shuts down part of …
Specialty
Crime / social engineering fraud
A community association's crime policy, sometimes called the fidelity or crime bond, is built around one core insuring agreement: employee d…
Endorsements
Increased cost of construction (ICC)
Ordinance or law coverage has three separate parts, and increased cost of construction (often called Coverage C) is the one that pays the ex…
Endorsements
Mold and fungus coverage
Mold, mildew, wet or dry rot, and similar fungus are handled very differently from ordinary property damage on a community-association maste…
Specialty
Hired and non-owned auto liability
Two related coverages sit under the label hired and non-owned auto (HNOA), and neither one insures a vehicle the association owns. Hired aut…
Specialty
Pollution / environmental liability
Almost every standard master policy is built to keep pollution out. The commercial general liability policy carries what the industry calls …
Specialty
Terrorism (TRIA) Coverage
The Terrorism Risk Insurance Act (TRIA), first enacted in 2002 and reauthorized through December 31, 2027 by the Terrorism Risk Insurance Pr…
Compliance
Windstorm Mitigation Credits (Wind-Mit Inspection)
In hurricane-exposed states, an insurer will apply premium credits for construction features that make a building more resistant to windstor…
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