Condo Association Insurance Washington: Complete HOA Coverage Guide

Managing a condominium association in Washington State comes with a set of insurance challenges that most other organizations never face. You are responsible for protecting a shared building, managing significant reserve funds, making decisions on behalf of dozens or hundreds of unit owners, and navigating a legal framework that places specific insurance obligations on the association. A single uninsured water damage event or liability claim can drain reserve accounts, trigger special assessments, and create lasting conflict among owners.

Getting your insurance right is not optional. It is a legal duty, a fiduciary responsibility, and the most effective way to protect both the community's assets and the board members who volunteer their time to manage them.

What Is Condo Association Insurance?

Condo association insurance refers to the package of policies that protect the association itself, the common property, the governing board, and the community's financial assets. It is fundamentally different from the individual homeowner policies that unit owners carry on their own units.

Master policy vs. individual unit owner policies (HO-6): The association carries a master policy that covers the building's structure, common areas, and shared liability exposures. Individual unit owners then carry their own HO-6 policies to cover the interior of their units, personal belongings, personal liability, and any loss assessment charges passed down from the association. The master policy and HO-6 policies work in tandem. Gaps between the two are where costly disputes arise.

"Bare walls" vs. "all-in" coverage: The master policy can be structured in two principal ways. A "bare walls" policy covers the building structure itself but stops at the unfinished interior surfaces of each unit. That means drywall, flooring, cabinets, fixtures, and appliances inside the unit are the individual owner's responsibility. An "all-in" (or "single entity") policy extends coverage to include the unit interiors as originally built, including standard fixtures and finishes. Washington's Condominium Act and your CC&Rs typically specify which approach your association must follow. Understanding this distinction is critical because it determines what unit owners must insure on their own and what falls under the association's coverage.

Essential Coverage Types for Washington HOAs

A properly insured condo association in Washington carries multiple policy types. Each addresses a different category of risk.

Master Property Insurance

Master property insurance is the foundation of any condo association's coverage program. It protects the physical building and all common elements: the roof, exterior walls, foundation, lobbies, hallways, elevators, stairwells, laundry rooms, parking garages, and any other shared structures. If the building includes amenities like a pool, fitness center, or clubhouse, those are covered as well.

This policy pays to repair or rebuild after covered events like fire, windstorm, hail, vandalism, and certain types of water damage. It should include building ordinance coverage, which pays the additional cost of rebuilding to current code rather than the code in effect when the building was originally constructed. For older Washington condos, this endorsement is especially important because seismic and energy codes have changed substantially over the decades.

General Liability Insurance

General liability insurance protects the association when someone is injured in a common area or when the association causes property damage to a third party. If a visitor slips on an icy walkway, trips on a broken stair, or is injured by a falling light fixture in the lobby, the association's general liability policy responds.

Standard coverage includes bodily injury, property damage, personal and advertising injury, and medical payments to others. Most associations carry at least $1 million per occurrence and $2 million in aggregate liability limits. For larger communities or those with significant foot traffic, higher limits or an umbrella policy may be warranted.

Directors and Officers (D&O) Insurance

Board members of a condo association make decisions that directly affect the financial interests and daily lives of every unit owner. D&O insurance protects those board members from personal financial liability when they are sued for decisions made in their official capacity. Claims can arise from alleged mismanagement of funds, failure to enforce CC&Rs, improper handling of maintenance requests, discrimination claims, or disputes over special assessments.

Without D&O coverage, board members face personal exposure for legal defense costs and settlements. This makes it extremely difficult to recruit and retain qualified volunteers for the board. D&O insurance is not a luxury. It is a practical necessity for any functioning association.

Fidelity Bond / Crime Coverage

Fidelity bonds protect the association's funds from theft or embezzlement by board members, property managers, employees, or other individuals who have access to the association's bank accounts. Washington associations often manage substantial reserve funds, and the temptation and opportunity for misappropriation are real.

Many CC&Rs and lender requirements specify that the association must carry fidelity bond coverage equal to at least the total of all reserve funds plus three months of assessments. Even if your governing documents do not require it, carrying adequate fidelity coverage is a best practice that every Washington condo association should follow.

Workers' Compensation

If your association employs anyone directly, including maintenance staff, groundskeepers, a resident manager, or office personnel, Washington State requires workers' compensation coverage through the Department of Labor & Industries (L&I). Even if your association uses a management company, you should verify that the management company carries its own workers' comp coverage for its employees who work on your property.

Workers' comp premiums are paid quarterly based on hours worked and job classification. Failing to carry coverage when required can result in penalties from L&I and personal liability for the board.

Umbrella / Excess Liability

An umbrella or excess liability policy provides additional liability limits above the underlying general liability and auto policies. For larger communities with hundreds of units, significant common areas, or high-value amenities, the standard $1 million or $2 million in liability coverage may not be sufficient to protect the association from a catastrophic claim. Umbrella policies typically provide an additional $1 million to $10 million in coverage at a relatively modest cost.

Washington State Requirements for Condo Associations

Washington's legal framework imposes specific insurance obligations on condo associations.

WA Condominium Act (RCW 64.34): The Washington Condominium Act requires associations to maintain property insurance on the common elements and, in many cases, on the units themselves. The Act specifies that insurance must cover the full insurable replacement cost of the building. It also addresses how insurance proceeds must be handled after a loss, including provisions for reconstruction and the distribution of proceeds if the community decides not to rebuild.

Reserve study requirements and insurance implications: Washington law requires most condo associations to conduct a reserve study at least every three years. The reserve study identifies the major components the association is responsible for maintaining and estimates the remaining useful life and replacement cost of each. These replacement cost figures directly inform your insurance valuations. If your master policy's building limit is significantly lower than the replacement cost identified in your reserve study, you may be underinsured, and the board could face personal liability for the gap.

CC&R requirements: Your association's CC&Rs (Covenants, Conditions, and Restrictions) typically contain insurance provisions that may go beyond what state law requires. Common CC&R provisions include minimum coverage amounts, required policy types, specific deductible limits, and requirements for certificates of insurance. Lenders who hold mortgages on individual units may also impose insurance requirements on the association. Review your CC&Rs carefully and ensure your coverage meets or exceeds every stated requirement.

How Much Does Condo Association Insurance Cost?

Condo association insurance costs vary widely depending on the characteristics of the community.

Key cost factors include:

• Number of units: A 10-unit building costs less to insure than a 200-unit complex
• Building age: Newer buildings with updated systems receive better rates
• Construction type: Wood-frame buildings cost more to insure than concrete and steel
• Location: Coastal or flood-prone areas carry higher premiums
• Amenities: Pools, hot tubs, fitness centers, and playgrounds increase liability exposure
• Claims history: Prior claims, especially water damage, significantly raise premiums
• Replacement cost: Higher building values mean higher property premiums

As a general reference, smaller associations with 10 to 30 units might expect to pay between $3,000 and $10,000 per year for a basic coverage package including master property, general liability, and D&O coverage. Larger associations with 50 to 200 or more units, or those with significant amenities, can see annual premiums ranging from $15,000 to $75,000 or more.

Why older buildings cost more: Washington has a large stock of condominiums built in the 1960s through 1980s. Many of these buildings still have original plumbing (galvanized pipes prone to leaking), outdated electrical systems (including aluminum wiring or knob-and-tube wiring in some converted buildings), and aging roofing materials. Insurers view these buildings as significantly higher risk, particularly for water damage claims. Some carriers decline to insure buildings with galvanized plumbing entirely. Updating these systems is expensive, but it can dramatically reduce insurance costs and prevent catastrophic losses.

Common Claims for Washington Condo Associations

Understanding the most frequent claim types helps associations prioritize risk management.

• Water damage: This is the number one claim for Washington condo associations by a wide margin. Burst pipes, leaking plumbing, failed water heaters, and roof leaks account for the majority of property claims. A single pipe failure in an upper-floor unit can cascade water through multiple floors, damaging common areas and several units simultaneously. The resulting claims can easily exceed $100,000.
• Fire: Kitchen fires, electrical fires, and fires caused by aging building systems are the second most common and often the most severe. A single fire can damage or destroy an entire building, making adequate replacement cost coverage essential.
• Liability claims: Slip-and-fall injuries in common areas, particularly during Washington's wet winter months, generate frequent general liability claims. Inadequate lighting, uneven pavement, and deferred maintenance on walkways are common contributing factors.
• D&O claims: Board members face lawsuits from disgruntled owners who disagree with assessment increases, maintenance decisions, or CC&R enforcement. These claims are expensive to defend even when the board acted properly, making D&O coverage essential.

Without proper coverage, a major water damage event or liability claim can force the association to levy a special assessment on all unit owners. Special assessments of $5,000 to $20,000 per unit are not uncommon when an uninsured or underinsured loss occurs. This creates financial hardship for owners and erodes trust in the board.

How to Lower Your HOA Insurance Costs

Proactive management can significantly reduce your association's insurance premiums.

• Preventive maintenance: Regularly inspect and maintain plumbing, roofing, HVAC, and electrical systems. Water damage prevention is the single most impactful step you can take. Install water leak detection systems in mechanical rooms and common areas.
• Update aging building systems: Replacing galvanized plumbing with copper or PEX, upgrading electrical panels, and installing a new roof can reduce premiums by 15-30% in some cases. Document all upgrades and share them with your insurance broker.
• Increase deductibles strategically: Raising your master policy deductible from $5,000 to $10,000 or $25,000 can lower premiums meaningfully. Ensure your reserves can absorb the higher deductible and that your CC&Rs address how deductibles are allocated.
• Install safety features: Fire alarm systems, sprinkler systems, security cameras, and controlled-access entry all reduce risk and can earn premium discounts.
• Maintain a clean claims history: Avoid filing small claims that fall near the deductible. Frequent small claims can increase premiums more than the payouts are worth.
• Work with a specialized broker: Insurance for condo associations is a specialized field. A broker who understands Washington condominium law, HOA governance, and the specific risks of multifamily buildings can structure coverage more efficiently than a generalist agent.
• Bundle policies: Purchasing your master property, general liability, D&O, and crime coverage through the same carrier or program often yields package discounts.

Get Your Condo Association Covered Today

Protecting your condo association starts with understanding your exposures and building a coverage program that meets Washington's legal requirements, satisfies your CC&Rs, and provides genuine financial protection for your community.

SmartInsured works with Washington condo associations of all sizes to build comprehensive, competitively priced insurance programs. We understand the specific requirements of the Washington Condominium Act and can help your board navigate the complexities of master policies, D&O coverage, fidelity bonds, and more.

Get a quote today by visiting our quote form or calling us directly at 425-209-1206. We can review your current coverage, identify gaps, and provide options from multiple carriers. Most associations can have updated coverage in place within days.

Your board members volunteer their time to serve the community. Make sure they are protected, and make sure your building and finances are too.