DEFINITION of ‘Bare Walls Coverage’
A type of insurance coverage that applies to communally used features in residential multi-family buildings. Bare walls 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. This type of coverage is purchased by the condominium association, and is outlined in the association’s rules and covenants.
INVESTOPEDIA EXPLAINS ‘Bare Walls Coverage’
Bare walls coverage is used when the items and features of a building are used by many different people, thus making it difficult to require any one particular party to purchase an insurance policy. Because a single condo unit resident cannot be asked to purchase a policy covering these items, the condominium association purchases this insurance policy using the fees they charge the condo owners for upkeep. This is the most limited type of coverage that a condominium association can choose to purchase.
Bare walls coverage only applies to common areas, not to anything that is used predominately by a condominium owner. Owners of individual condo units are required to purchase their own insurance to cover damages to anything from within their own unit, such as sinks and toilets. The condo owner is also responsible for any personal items found in the unit, such as furniture, clothing, and electronics.
Rather than choose bare walls coverage, a condominium association can instead choose to purchase single entity coverage or all-inclusive coverage. Single entity coverage applies to all property, including items in individual units. It does not apply to the personal items, such as computers and clothing, of the individual condo owners, and does not apply to any enhancements made to the condo unit. This type of insurance is the most common property insurance purchased by condominium associations. All-inclusive coverage includes the features of single entity coverage, but also covers improvements.