If you buy a condominium your mortgage lender may ask you to provide proof of “walls in” insurance coverage for the condominium building.
But what does “walls in” mean..? And why is your condo mortgage lender insisting that it be part of your condo building’s insurance coverage?
"Walls In", "Bare Walls In" and "All In" Meaning
The terms “walls in”, “bare walls in” and “all in” have different meanings, but are sometimes conflated or used interchangeably.
Each term refers to the amount of property insurance you will have on your condominium through your condominium association’s insurance policy.
To make it more confusing, “Walls in” can also be a term used for an HO-6 form, also known as a condominium owner’s insurance policy. The HO-6 form protects your condo and your own personal property in the condo itself.
The breadth of insurance coverage being provided to the condominium association is the essential difference between these terms…
Condominium mortgage lenders prefer broader terms because it means that their collateral (your condo) is more broadly protected in the event of a property loss, such as a fire or flood.
Below are descriptions of each term, from narrower to broader, in terms of what part of your condo unit, if anything, is covered by the condominium building’s master insurance policy:
- Bare Walls In: Refers to coverage of the structure of the condominium and the common areas within the condominium building. Any areas of the building that are used by all residents of the condominium would be included in a bare walls in policy description. Bare walls in offers limited coverage for individual condo owners.
- Walls In: Also referred to as “single entity coverage” or “studs in” refers to real property coverage from the exterior framing inward, including fixtures. However, this would not include alterations, appliances or other property types contained within the walls of a condo unit.
- All In: Also referred to as “all inclusive coverage“. Refers to everything included above, and may also include tenant, improvements, alterations, appliances, ventilation, cooking, dishwashing, laundering, security equipment or housekeeping property.
Again it’s important to note that the above terms refer to the coverage in your condominium building’s, or condo association’s, master insurance policy…
You will need to buy a separate HO-6, or condo owner’s policy, to protect your personal property (i.e. the stuff owned by, used by or in the care, custody or control of the unit owner).
Your HO-6 should also provide general liability coverage and other coverages, such as loss of use, if for some reason you are unable to inhabit the condo and need to find a temporary place to live.
How Do I Know What Type Of Insurance My Condo Board Has?
Your mortgage lender has asked for proof of coverage, but how do you provide proof if the exact terms they are looking for are not specifically listed in your condominium’s master insurance policy?
You will need to read the language in your condominium’s insurance policy to determine what type of coverage is actually provided.
Your condo board’s insurance policy will often look to providing coverage levels that are outlined in the insurance requirements of your condominium building’s operating agreement, or bylaws.
In other words, if the condo bylaws call for “walls in” or “all in” or “bare walls in” in language similar to that described above, then that is the level of coverage that the insurance policy will provide.
Have questions about “walls in” coverage or need property insurance for your condo building? Schedule a call with me now.