What Every Florida Condo Board Should Know About Master Policy Insurance

If you serve on a Florida condominium board, your association's master property policy is likely the single most expensive line item in your annual budget. It's also one of the most consequential decisions your board makes each year at renewal.

Yet most board members sign off on master policy renewals with only a surface-level understanding of what they're approving. That's not a criticism — insurance is complex, the documents are dense, and the terminology is designed for industry professionals, not volunteer board members.

This guide breaks down what your master property policy actually does, what Florida law requires, and where the most common and costly gaps tend to hide.

What the Master Policy Covers

Your association's master property policy covers the physical building structures, common area improvements, and shared building systems against covered perils — fire, wind, water damage, and other named risks.

Specifically, it typically includes:

• Building structures — walls, roofs, floors, and foundations
• Common area improvements — lobbies, hallways, pool decks, clubhouses, parking structures
• Building systems — elevators, HVAC, plumbing, and electrical systems
• Permanently installed fixtures — depending on your coverage form

The scope of what's covered inside individual units depends on whether your association carries an "all-in" or "bare walls" policy. This distinction affects every unit owner in your building and is one of the most frequently misunderstood aspects of association insurance.

All-In vs. Bare Walls: Why It Matters

An all-in policy covers everything from the studs in, including unit finishes like flooring, cabinetry, countertops, and fixtures as originally installed (or replacements of like kind and quality). Unit owners still need their own HO-6 policy for personal property and improvements they've made beyond the original finishes.

A bare walls policy covers only the structural elements. Unit owners are responsible for everything inside their unit — flooring, cabinets, appliances, fixtures, and all interior finishes. This requires a more robust HO-6 policy from each unit owner.

The critical issue: if your board hasn't clearly communicated which type of coverage your master policy provides, many unit owners are likely underinsured without knowing it. Their HO-6 policy may be structured assuming the master policy covers more than it actually does.

What Florida Law Requires

Under Section 718.111(11) of the Florida Condominium Act, condominium associations must maintain property insurance on all common property and association property at replacement cost. Key requirements include:

• The association must be the named insured
• Coverage must include all portions of the condominium property as originally installed or replacement of like kind and quality
• The deductible cannot exceed the greater of $10,000 or 5% of the policy value covering the buildings
• The policy must cover "all common elements, association property, and the condominium property to be insured by the association"

These are statutory minimums. Your Declaration of Condominium likely adds requirements beyond what the statute mandates. Many boards don't realize their governing documents impose higher coverage standards than state law.

Where Boards Get Into Trouble

The Replacement Cost Gap

Your master policy's coverage limit is based on a replacement cost estimate — what it would cost to rebuild your building from the ground up at current construction costs. If that estimate is wrong, your coverage is wrong.

Construction costs along the Florida Gulf Coast have increased dramatically over the past several years. An association whose building was appraised at $20 million five years ago may now face a $28-30 million replacement cost. If the policy limit hasn't been updated, there's an $8-10 million gap that becomes a special assessment in a total loss scenario.

The fix: Get a current insurance appraisal from a qualified firm. Not a real estate appraisal — an insurance replacement cost appraisal. These are different calculations for different purposes. Update your coverage limit to match.

Named Storm Deductibles

In coastal Florida, named storm (hurricane) deductibles are typically 2-5% of the total insured value. That percentage sounds small until you do the math.

On a building insured for $30 million, a 3% named storm deductible is $900,000. That's $900,000 your association pays out of pocket before insurance coverage begins. For many associations, that number exceeds their entire reserve fund.

Boards should know exactly what their named storm deductible is in dollar terms — not just the percentage — and have a plan for funding it. Some associations carry deductible buydown coverage or maintain a dedicated deductible reserve.

Ordinance or Law Coverage

When a building is damaged and needs substantial reconstruction, current building codes will almost certainly require upgrades beyond the original construction. Standard property policies may not cover the additional cost of meeting current codes.

Ordinance or law coverage fills this gap. It typically covers three components: the cost to demolish undamaged portions of the building that must be brought to code, the increased cost of construction to meet current codes, and the loss of the undamaged portion of the building.

This coverage isn't always included by default, and when it is, the sublimit may be inadequate. After Hurricane Ian, many associations discovered their ordinance or law limits were a fraction of what was needed.

Questions Your Board Should Ask at Renewal

Before your board votes to approve the annual insurance renewal, these questions deserve clear answers:

1. When was our last insurance appraisal? If it's more than two years old, it probably doesn't reflect current construction costs.

2. Does our coverage limit match current replacement cost? Compare the appraisal to the policy limit.

3. What is our named storm deductible in dollar terms? Not the percentage — the actual dollar amount.

4. Do we have ordinance or law coverage? What's the limit, and is it adequate for a major loss?

5. Is our policy "all-in" or "bare walls"? Have we communicated this clearly to unit owners?

6. What's our wind vs. non-wind deductible structure? These are often different amounts.

7. Are we in an admitted or surplus lines carrier? Both can be appropriate, but the implications for guaranty fund protection differ.

Understanding these fundamentals won't make you an insurance expert, but it will make your board a more informed buyer — and that's what protects your association's financial health.

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