Single Entity Coverage

What Is Single Entity Coverage?

Single entity coverage is a type of insurance policy that covers all real property in a condominium, including both the common areas shared by all property owners as well as the individual units.

Single entity coverage is used for condominiums (or condos), a type of residential property in which some common elements, such as the entryway or light fixtures, are used by all residents of the building, while other elements are only used by the condo unit owner.

How Single Entity Coverage Works

Single entity coverage is important for owner-occupied multifamily housing because the residents of condo units cannot be asked to purchase an insurance policy covering items that are shared by other condo owners, such as an entryway or a light fixture in a hallway. The condominium association purchases this insurance policy, using the fees charged to the condo owners for upkeep.

A deductible will often apply to property insured in the association's policy. The deductible could be on an occurrence basis, or it could apply separately to each building or unit. There may be different deductibles for the various types of property covered. One aspect of the deductible to consider is how it will be handled with the unit owner. Unless the association documents specify who is responsible, the association or the unit owner, then the association may need to adopt a policy that describes the circumstances under which a unit owner would be responsible for paying the deductible.

What Single Entity Coverage Protects

In addition to protecting property shared by all condo owners, single entity coverage also covers the property inside the individual condo units. This includes appliances and anything that is not considered a structural improvement or an addition. Essentially, it covers what was originally part of the condo when it was built. It does not apply to the personal items (such as computers and clothing) of the individual condo residents, and does not apply to any enhancements made to the condo unit.

This is a semi-limited type of coverage that a condominium association can choose to purchase, and is outlined in the association’s rules and covenants. This type of insurance is the most common property insurance purchased by condominium associations.

Rather than choose single entity coverage, a condominium association can instead choose to purchase bare walls coverage or all-inclusive coverage. Bare walls coverage only applies to items found in shared areas of the building, such as light fixtures, walls, and floors, and is the most limited type of condo coverage. All-inclusive coverage includes the features of single entity coverage, but also covers improvements.