Washington Condo Insurance: Master Policy Rules and Laws

Under Washington law, a condo association must carry property insurance of at least 80 percent of the property’s actual cash value, along with liability coverage for the common elements. The master policy must treat each unit owner as an insured person for common-element liability. At The HOA Guide, we review state condo statutes so board members and owners know what the law requires before a loss occurs.

The Washington Condominium Act establishes explicit baseline protections that bind every residential condominium community. Understanding these statutory baselines helps boards budget properly and shows owners where their personal coverage needs to step in.

What Washington Law Requires the Association to Insure

The Washington Condominium Act sets specific standards for association coverage. Under RCW 64.34.352, an association must maintain property insurance against all risks of direct physical loss commonly insured against, to the extent that coverage is reasonably available.

This property coverage cannot be less than eighty percent of the actual cash value of the insured property at the time the insurance is purchased and at each renewal date. The statute expressly excludes certain items from that calculation:

• Land
• Excavations
• Foundations
• Other items normally excluded from property policies

In addition to property protection, RCW 64.34.352 requires commercial general liability insurance. This policy must cover all occurrences commonly insured against for death, bodily injury, and property damage arising out of or in connection with the use, ownership, or maintenance of the common elements. The board determines the coverage amounts, but the limits cannot be less than any amount specified in the condominium declaration. For broader context on how these protections operate nationally, review our master policy explainer and our general guide on what condo association insurance covers.

The 80 Percent Actual-Cash-Value Floor

Washington law establishes a minimum floor rather than a full replacement mandate. The statute requires coverage for at least eighty percent of actual cash value, not one hundred percent of replacement cost. Understanding the difference between these valuation methods is necessary for every board member evaluating a renewal quote.

Coverage Metric	Actual Cash Value (Statutory Floor)	Replacement Cost (Extended Coverage)
Valuation Standard	Accounts for physical depreciation and age	Covers current cost to repair or replace new
Statutory Status	Required baseline under RCW 64.34.352	Not mandated by Washington statute
Board Discretion	Minimum legal coverage level	Permitted if the board or declaration chooses
Shortfall Risk	Higher gap between claim payout and rebuild expense	Lower out-of-pocket exposure for owners

Actual cash value factors in wear and tear over time. Replacement cost pays what rebuilding costs today without deducting for depreciation. If an association insures only to the eighty percent actual-cash-value floor, a severe loss can leave a substantial financial gap. The insurer pays depreciated value on eighty percent of the property, but contractors demand full market rates for labor and materials. When insurance payouts do not cover complete reconstruction, owners face association assessments to fund the remaining balance. To learn how individual policies respond to those assessments, read our overview of loss assessment coverage.

What the Master Policy Gives Individual Owners

RCW 64.34.352 builds three significant protections directly into every association policy for the benefit of unit owners.

First, the policies must make each unit owner an insured person for liability arising from the owner’s interest in the common elements or membership in the association. If a visitor slips on a common walkway, the association policy covers the owners collectively.

Second, the insurer must waive its rights of subrogation against unit owners, members of their households, and lessees. This prevents the association’s carrier from paying a building claim and then suing an owner whose accidental kitchen fire caused the damage.

Third, the statute establishes priority of payment. The association’s policy provides primary coverage when another insurance policy covers the same risk.

Even with these protections, an association policy does not replace personal coverage. RCW 64.34.352 explicitly notes that unit owners may obtain separate insurance for their own benefit. Owners need their own protection for interior finishes, personal belongings, and personal liability. Review our guide to HO-6 insurance and our comparison of master policies vs homeowners insurance to evaluate the division between association and personal policies.

Where the Insurance Money Goes After a Covered Loss

Insurance proceeds from a master policy claim do not go straight into general operational funds. Under RCW 64.34.352, insurance proceeds are held in trust and disbursed first for the repair or restoration of the damaged property.

The association must repair or replace damaged property promptly. The statute provides only three narrow exceptions to this prompt-repair mandate:

• The condominium is terminated
• Repair or replacement would be illegal under any state or local health or safety statute or ordinance
• Eighty percent of the unit owners vote not to rebuild

Unless one of those three exact statutory conditions is met, the board has an affirmative legal duty to restore the building using the trust proceeds.

When Coverage Is Unavailable: Owner Notice and the Washington FAIR Plan

Property coverage can become difficult to secure in high-risk areas. If the required insurance becomes unavailable or is canceled, RCW 64.34.352 requires the association to promptly notify each unit owner. Boards cannot leave owners unaware when coverage lapses.

The state provides a safety valve for difficult markets. Washington’s Office of the Insurance Commissioner (OIC) serves as the state’s insurance regulator. For properties unable to secure coverage in the voluntary private market, Washington maintains a FAIR plan (Fair Access to Insurance Requirements).

Under WAC 284-19-020, the Washington FAIR plan operates as an industry placement facility and joint reinsurance association designed to make essential property insurance available when it cannot be obtained through normal channels. The OIC wildfire and insurance resource directs property owners who cannot find private market coverage to this program. Other states maintain comparable residual programs, as we detail in our look at Florida condo insurance. For nationwide carrier options, consult our list of the best HOA insurance companies.

Who This Guidance Does Not Fit

This guidance applies to residential condominiums governed by the Washington Condominium Act. It does not fit a condominium whose units are all restricted to nonresidential use. It also does not fit a single-family homeowners association that is not legally organized as a condominium, because single-family HOAs do not maintain common residential structures under RCW 64.34.352. Communities organized under different statutory structures must check their own governing documents for insurance requirements.

What Would Change This Guidance

Three developments would change the insurance obligations outlined here. First, a legislative amendment to RCW 64.34.352 altering valuation baselines or owner protections would supersede these rules. Second, administrative changes to WAC 284-19-020 adjusting the eligibility or structure of the Washington FAIR plan would alter residual market access. Third, a stricter standard written into your condominium declaration, such as a requirement to maintain one hundred percent full replacement cost, binds the association above the statutory baseline.

Legal and Insurance Guardrails

This is educational information, not insurance or legal advice. A board should confirm its coverage against RCW 64.34.352 with a licensed Washington insurance broker experienced in condo/HOA master policies, and consult a Washington community-association attorney for its specific situation. Explore our main HOA insurance hub to compare broader policy terms and community governance requirements.