Property insurance

What the master policy has to insure

In most states built on the Uniform Common Interest Ownership Act model, insuring the common elements is a statutory duty of the association, not a discretionary board decision. West Virginia's enactment of the uniform act sets the standard this way:

"against all risks of direct physical loss commonly insured against"

Source: West Virginia Code §36B-3-113, State of West Virginia, via FindLaw

For units with horizontal boundaries, statutes built on this model typically draw the line between what the master policy covers and what the unit owner's own policy covers at the unit's original, as-built condition, not at improvements a later owner installed. That is the origin of what practitioners call "bare walls" coverage; see bare-walls vs all-in coverage and master policy vs HO-6 for how that split plays out inside a unit.

How much is enough: the floor moves by state

How much insurance counts as "enough" is set by your state's own statute, and it is not the same number everywhere. The Uniform Common Interest Ownership Act model sets a floor of 80 percent of actual cash value, excluding land and foundations. Texas, which follows that model, sets the same 80 percent floor for replacement cost or actual cash value. Florida sets a materially higher standard:

"Adequate property insurance, regardless of any requirement in the declaration of condominium for coverage by the association for full insurable value, replacement cost, or similar coverage, must be based on the replacement cost of the property to be insured as determined by an independent insurance appraisal or update of a prior appraisal."

Source: Florida Statutes §718.111(11)(a), The Florida Senate

Florida condominium associations also must repeat that independent appraisal at least once every three years. That periodic appraisal duty is confirmed for Florida condominiums specifically; check your own state's statute and governing documents before assuming it applies to you.

When a lender's rules set a higher floor

If any unit in the project relies on Fannie Mae eligible financing, Fannie Mae's own guide requires master property insurance covering at least 100 percent of the estimated replacement cost of the project improvements, common elements included. Where that requirement is higher than your state's statutory minimum, the higher number is the one that actually controls, because falling short can make units unfinanceable regardless of what state law alone would demand.

Put the layers in order: federal catastrophe programs and GSE financing requirements sit on top, state statute sets the legal floor beneath that, and your declaration and bylaws can raise that floor further but cannot lower it. When the numbers disagree, the association has to satisfy the highest one that applies, not an average of the layers.