Main points to consider as a condominium owner or a member of the HOA board
HOA Master Policy
All condominium associations must have an HOA master insurance policy to protect common areas against damage caused by the risks they face in their daily operation. These exposures include: fire, explosion, lightning, earthquake, volcanic eruption, storms, hurricanes, floods, avalanches, landslides, damage to third parties and owners within the facilities, breakage of machinery and electronic equipment, theft, and breakage of glass. With this insurance policy, the HOA is guaranteed to have the money for the repairs and that the operation returns to its normal condition before the accident occurred. The HOA policy does not cover the contents of the units or the damages that people suffer inside them. Each condominium owner should have their own individual insurance policy to cover these exposures.
For insurance purposes the whole structure of the building is considered common áreas including the internal walls, ceilings, and floors as well as the water, gas, and electrical systems, and the entire structure of the building including its façade. Also included are the outside constructions, including roofs, pools, retaining walls, security booth, perimeter fences, parking lots, etc. Machinery and equipment (elevators, pumps, transformers, gym equipment, etc.) that provide service to the complex, should be covered in the HOA insurance package as well. The owner of a condominium has a percentage (proindiviso) of all of them. Therefore, it is in his/her interest that they are properly protected.
Windows, sliding doors and balconies
These are part of the façade of the building and, although they are for the private use of individual condominium owners, they should be covered in the HOA master policy. The reason is, if a condominium has damage to the windows, sliding doors, or balcony and it is not repaired, it could cause additional damage to the building. For this reason, this should be covered within the Glass Breakage section of the Master Policy.
The first and most important step is for the administrator, together with the HOA board of directors, is to know exactly the reconstruction cost of all the constructions and contents of the common areas including machinery and equipment. Having this information updated gives certainty to the owners that their investment is insured correctly.
Damages not covered in the Master Policy
Sometimes the master policy does not cover losses due to Hydrometeorological Phenomena which is damage from rain, hurricane, tsunamis, flood, avalanches, landslides, etc.). Each owner should consider insuring their condominium for the total investment at its current market value. Your insurance broker should be able to guide you through these exposures and explain the coverages available to keep your investment in Mexico as secure as possible.