Washington Condo Associations Insurance

Insurance for condominium associations, sometimes called a “master policy,” is fundamentally different from individual homeowners policies. In a condo, ownership is split: unit owners hold title to the airspace within the walls, while the association owns the common elements. That split ownership means both parties have insurance responsibilities that must dovetail perfectly or costly coverage gaps appear.

The Legal Framework

The Washington Condominium Act (RCW 64.34) dictates the minimum insurance an association must purchase. Newer developments built after July 1, 1990, fall entirely under this statute, while older buildings still reference it for best practice. The Act mandates property insurance on the entire condominium, excluding improvements made by individual owners, in an amount no less than 80 percent of the replacement cost. It also requires liability insurance covering occurrences in common areas. Failing to meet these requirements can expose board members to personal liability and jeopardize mortgage lending within the community because most lenders verify master-policy compliance before approving loans.

What the Master Policy Covers

A standard master policy addresses two broad categories: physical damage to common property and liability arising from the association’s operations. Physical damage could include a wind-blown roof, a burst sprinkler line, or an electrical fire in the garage. Liability claims might stem from a visitor slipping on a wet stairwell or a contractor injuring themselves while repairing siding. The policy is written in the association’s name and typically carries higher limits, often starting at $1 million for general liability and extending into the tens of millions when umbrella layers are added.

The language inside a master policy determines where the association’s coverage ends and the unit owner’s personal HO-6 policy begins. Misunderstanding these boundaries is one of the top reasons claims stall or are denied.

Bare Walls vs. Single Entity vs. All-In

Washington associations usually opt for one of three structures. A Bare Walls policy insures the basic shell—studs, insulation, wiring, and plumbing—leaving cabinets, flooring, and fixtures to the individual owner. A Single Entity policy adds original builder-installed finishings, such as base carpet or stock appliances. An All-In, sometimes called “Walls-In,” policy goes further by covering post-construction upgrades, making it easier for owners but more expensive for the association. Because Seattle and Bellevue condos frequently showcase high-end renovations, many boards lean toward the Single Entity option to contain costs while still meeting lender expectations. Knowing which approach your building carries is critical for instructing owners on how much dwelling coverage to purchase individually.

How Carriers Calculate Premiums

Insurers price master policies based on a matrix of factors: total insured value, construction type (frame, joisted masonry, or fire-resistive), year built, claims history, presence of sprinklers, and even occupancy patterns. A high-rise with 24/7 concierge services and full sprinkler coverage generally enjoys lower rates than a wood-frame garden complex built in the 1980s. In 2023, Washington’s average master-policy premium rose roughly 8 percent, driven largely by rising construction costs and more frequent water-damage claims. Boards can counteract sticker shock by documenting maintenance programs and performing regular plumbing inspections, both of which resonate positively with underwriters.

While every association’s governing documents should be consulted, state law establishes a baseline coverage suite that no board can ignore.

Property Coverage

The property portion protects against direct physical loss to buildings and common elements. Washington statutes require Replacement Cost valuation, meaning the insurer pays to rebuild new for old without deduction for depreciation. Importantly, the policy limit must comply with the 80 percent coinsurance rule, and most boards commission an independent insurance appraisal every three years to verify adequacy. Skipping appraisals can result in painful coinsurance penalties after a large loss.

General Liability

General liability protects against bodily injury or property damage arising from the association’s premises. Typical limits start at $1 million per occurrence and $2 million aggregate, but many communities layer an umbrella of $5 million to $25 million on top, especially when amenities like pools, fitness centers, or rooftop decks amplify risk. Washington’s litigious environment—personal injury suits in King County increased 13 percent between 2019 and 2022—makes generous limits a prudent, board-level fiduciary measure.

Directors and Officers (D&O)

Board members make decisions about budgets, hiring, and rule enforcement, any of which can trigger allegations of wrongful acts. D&O insurance pays legal fees and settlements when the board is sued for alleged discrimination, breach of fiduciary duty, or failure to maintain property. Premiums are modest compared with the risk; a mid-sized association might spend $1,200 annually for $1 million in coverage. Given that state law grants board members only limited immunity, D&O is considered essential rather than optional.

Washington’s varied geography—from seismically active Cascades to flood-prone river valleys—means certain perils fall outside the standard master policy. Savvy boards evaluate optional endorsements to close those gaps.

Earthquake and Flood

The Pacific Northwest sits along the Cascadia Subduction Zone, capable of generating magnitude-nine quakes. Standard property policies exclude earthquake damage, yet only about 18 percent of Washington condo associations currently purchase quake coverage. Deductibles are high—usually 5 percent to 20 percent of the insured value per building—but a quake could wipe out common elements entirely. Flood insurance faces a similar concern. Even inland counties like Thurston and Whatcom have experienced 100-year floods three times since 2009. If the community lies in a FEMA Special Flood Hazard Area, the board should strongly consider a National Flood Insurance Program (NFIP) master policy.

Ordinance or Law Coverage

After major damage, rebuilding must comply with current building codes, which evolve rapidly toward energy efficiency and seismic reinforcement. Ordinance or Law coverage pays the added costs of demolition, debris removal, and code-mandated upgrades. In Seattle, where local code now mandates green-roof installations on some replacements, lacking this endorsement can turn a covered $2 million loss into a $3 million out-of-pocket nightmare.

Equipment Breakdown

Elevators, boilers, HVAC chillers, even solar arrays can fail suddenly. Equipment Breakdown (formerly “Boiler and Machinery”) pays to repair or replace the hardware as well as associated property damage. Because elevator downtime directly affects habitability—especially for aging residents—many carriers require strict maintenance logs. For a 12-story condo with twin traction elevators, a $75 annual premium per elevator is a tiny price to avert six-figure repair invoices.

Boards seldom write a single check the day a policy binds. Instead, payments are woven into the annual budget, directly impacting assessment levels.

The Role of Assessments

Washington law empowers associations to levy assessments proportionate to a unit’s percentage ownership interest. Because insurance benefits all owners, premiums are usually paid from operating funds, not reserves. If premiums spike mid-year—say after a catastrophic claim—special assessments may be necessary. Transparent communication is vital: no owner likes surprise bills, but well-explained assessments preserve community trust.

Reserve Studies and Insurance

Every Washington association with more than nine units must conduct a reserve study every three years and update it annually. While reserve funds normally cover predictable capital projects, they can also serve as a deductible buffer. Many boards now fund earthquake or wind/hail deductibles—which can be hundreds of thousands of dollars—through reserves rather than risking an emergency special assessment.

Understanding the most frequent sources of loss empowers boards to spend preventive dollars wisely, often cutting insurance costs over time.

Water Damage—The Biggest Threat

Insurance carriers report that 53 percent of Washington condo claims involve water intrusion. Aging polybutylene supply lines rupture, failed washing-machine hoses drench multiple floors, and clogged rooftop drains flood penthouses. Preventive tactics include installing automatic water-shutoff valves, conducting annual fan-coil inspections, and requiring residents to replace rubber appliance hoses with braided steel. Some insurers now offer premium credits up to 5 percent for documented leak-detection systems.

Fire, Smoke, and Cooking Incidents

The Washington State Fire Marshal notes that unattended cooking is the leading cause of residential fires. In condos, smoke travels quickly through vents and hallways, triggering cleanup costs beyond the original unit. Installing stovetop fire-suppression canisters and upgrading fire doors can reduce both risk and premiums. Associations should also conduct semiannual dryer-vent cleanings; lint buildup is a hidden ignition source that insurers increasingly scrutinize during inspections.

Slip, Trip, and Fall Injuries

Liability claims often stem from icy walkways, uneven concrete slabs, or poorly lit stairwells. In 2022, average premises-liability settlements in Washington topped $68,000. Routine property inspections, prompt repair protocols, and meticulous record-keeping form the best defense. Carriers frequently provide no-cost risk-engineering walkthroughs, and boards should take advantage of these services.

Because master policies are sophisticated, partnering with a specialist pays dividends in both coverage quality and pricing.

Selecting a Specialist Broker

A broker versed in condominium risk can negotiate broader endorsements, alert the board to legislative changes, and advocate during claims. Look for professionals holding the Community Insurance and Risk Management Specialist (CIRMS) designation or equivalent. Interview at least two firms, request market-access lists, and verify that they place a minimum of 20 association accounts annually to ensure depth of knowledge.

The Annual Renewal Process

Begin gathering underwriting data 120 days before expiration. Provide updated building valuations, current financials, loss runs, and any major repair records. Early submission positions the association at the top of the underwriter’s stack, frequently translating into better terms. When quotes arrive, compare not just premium but exclusions, sublimits, and deductible structures. Boards should review side-by-side spreadsheets in an open meeting and document the rationale for their selection—documentation that D&O carriers appreciate if a decision is later challenged.

Condo residents sometimes assume the master policy eliminates the need for personal insurance. That belief can become a six-figure error.

HO-6 Policies

An HO-6 policy covers personal belongings, additional living expenses, personal liability, and the parts of the unit not insured by the master policy. Lenders typically require at least 20 percent of the unit’s replacement value in Coverage A (Dwelling), but owners should tailor that figure based on the master policy type. If the association carries Bare Walls, a high Coverage A number is essential, whereas All-In buildings allow owners to focus spending on contents and liability.

Deductible Buy-Downs and Loss Assessments

Washington master-policy deductibles have climbed sharply, with water-damage deductibles commonly reaching $25,000. When a claim originates in a single unit—think overflowing bathtub—the board often charges that deductible back to the offending owner. An HO-6 deductible buy-down endorsement reimburses this cost. Similarly, Loss Assessment coverage pays the owner’s share of any special assessment related to a covered master-policy claim. A mere $20 increase in annual premium can secure $50,000 of Loss Assessment protection.

Coordination Between Personal and Association Policies

Communication is key. Boards should distribute a concise insurance summary annually, outlining the master policy’s deductible amounts and interior coverage limits. Residents can then hand that summary to their personal agents, ensuring seamless coverage—a process that reduces friction during claims and fosters community goodwill.

The insurance landscape changes almost as quickly as Seattle’s skyline. Remaining informed helps boards anticipate budget shifts and policy modifications.

Rising Reinsurance Costs

Global reinsurers absorbed staggering catastrophe losses in 2022, from Florida hurricanes to Australian bushfires. Although these events occurred far from the Puget Sound, reinsurance pricing is global, and Washington condo associations felt the ripple. In 2023, earthquake endorsements rose an average of 14 percent statewide. Boards should expect continued upward pressure and explore multi-year policy terms where available to lock rates.

Impact of Climate Change

Warmer summers have intensified wildfire seasons in eastern Washington, and smoke drift now routinely reaches western metropolitan areas. Carriers monitor wildfire peril using satellite data; communities bordering natural greenbelts may face higher deductibles or even non-renewal unless they create defensible space and maintain fire-resistant landscaping. Climate-driven rainfall extremes also stress building envelopes, elevating water-intrusion risk. Boards must marry insurance with proactive maintenance to remain insurable.

Legislative Developments

The Washington Legislature periodically updates the Condominium Act. A 2020 amendment strengthened reserve-study disclosure requirements, and a 2022 bill proposed lower assessment default thresholds for initiating lien actions. While these laws do not directly change insurance mandates, they influence financial stability and can impact underwriting appetite. Boards should track legislative sessions or join a statewide community-association institute for updates.

Turning knowledge into action ensures that insurance functions as intended when disaster strikes.

Conduct a Coverage Gap Analysis

At least every two years, request that the broker provide a written gap analysis comparing current policies to statutory requirements, lender guidelines, and community needs. This analysis should clearly label any uncovered perils, sublimits, or outdated valuations. Closing identified gaps before a claim hits is far cheaper than litigating coverage disputes afterward.

Educate Board and Residents

Host an annual insurance seminar, inviting owners and renters alike. Use real-world claim examples—such as the 2019 Tacoma condo fire that resulted in a $900,000 deductible assessment—to drive home the importance of personal HO-6 coverage. Boards that invest in education often see faster claim resolutions because residents know whom to contact and what information to provide.

Keep Detailed Records

Insurance adjusters love documentation. Maintain digital archives of maintenance logs, meeting minutes, invoices, and inspection reports. When a pipe bursts, the association can instantly prove routine upkeep, accelerating claim approval. Good records also bolster the board’s defense if an owner alleges negligence, reducing D&O exposure.

Is earthquake insurance mandatory for Washington condo associations?

No, state law does not mandate earthquake coverage, but mortgage lenders for high-loan-to-value loans sometimes require it, and boards have a fiduciary duty to evaluate the risk given the region’s seismic profile.

Can the association charge the master-policy deductible to an owner?

Yes, if the governing documents allow and if the loss originated from the owner’s negligence or inside the owner’s unit. Washington courts have upheld such allocations when bylaws are explicit and the board acts reasonably.

How often should the board obtain an insurance appraisal?

Best practice is every three years, or sooner after major renovations that alter replacement costs. Some carriers now require appraisals as part of renewal on buildings over $50 million in value.

What happens if the association under-insures?

Under-insurance triggers coinsurance penalties, meaning the association becomes a co-insurer and pays a percentage of any claim. It can also breach loan covenants, jeopardizing refinancing for individual units.

Do renters need their own policy?

Absolutely. Renters should carry an HO-4 policy covering personal belongings and liability. Neither the master policy nor the unit owner’s HO-6 extends to a tenant’s possessions.

Insurance is neither glamorous nor simple, yet it is indispensable for safeguarding the physical and financial integrity of Washington’s condominium communities. By understanding statutory requirements, tailoring master policies, and fostering clear communication between boards, residents, and insurance professionals, associations can navigate an increasingly complex marketplace with confidence. A well-insured condo is more than a contractual necessity; it is a promise to every owner that their most significant investment—and their home—stands on solid ground.