HOA Insurance: What the Master Policy Covers and Where Your HO-6 Begins

A pipe lets go behind a wall in unit 4B on a Saturday night. By Monday the water has run through the two units below it, the drywall is out, and three owners want to know who pays. The board says the master policy covers it. The adjuster says the policy carries a per-unit deductible and the cabinets, flooring and appliances are not on it anyway. Nobody in the room can settle the argument, because nobody has read the declaration since the day it was recorded.

Every association gets that call eventually, and the answer is never simply "the master policy" or "your HO-6." It is a line drawn in your governing documents, redrawn by your state statute, and pushed on from a third direction by whoever finances the units.

Where the master policy stops and the unit owner policy starts

The association's master policy insures the building and the common elements, and the unit owner's HO-6 insures what the master policy leaves out. Community Associations Institute (CAI) puts the split in one sentence: the association insures common elements, shared risks, and sometimes units. The word carrying the weight there is "sometimes."

A complete association program is usually four policies:

• Property, for shared structures and amenities, and in some forms the units themselves.
• General liability, for injury or property damage claims in common areas.
• Directors and officers liability, for claims tied to governance decisions.
• Fidelity or crime, for theft or embezzlement of association funds.

The owner's HO-6 sits underneath all of that: personal property, the interior finishes the master policy excludes, personal liability, and, when included, loss assessment coverage for a special assessment levied after a covered claim.

Bare walls, single entity, all-in: three answers to the same question

Master policies differ mainly in how far into the unit they reach, and the industry uses three shorthand labels for it. A bare walls form covers the structure and common elements and stops at the unfinished interior surface, leaving drywall, flooring, cabinets and fixtures to the owner. A single entity form covers the building plus fixtures as originally installed, but not upgrades an owner paid for later. An all-in form covers the building and the fixtures, original or upgraded.

Those labels are useful in conversation and worthless in a claim. What binds is the policy form your association actually bought, read against the declaration.

Your statute and your documents draw the real line

State law decides how much freedom your documents have, and the answer changes at the state border. Two examples show how far apart the rules sit.

Florida writes the line into the statute. Section 718.111(11) requires the association's policy to cover the condominium property as originally installed or replacement of like kind and quality, then excludes a specific list: floor, wall and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window treatments, when they sit inside the unit boundaries and serve only that unit. Reconstruction of those items falls to the unit owner. A Florida board cannot buy its way around that division by choosing a broader form.

California approaches it from the liability side. Civil Code 5805 shields owners from tort claims arising out of their tenancy-in-common interest in the common area, but only while the association carries general liability coverage of at least $2 million for a development with 100 or fewer separate interests, or at least $3 million above that count. Let the coverage lapse below the threshold and the protection the statute offers your owners goes with it.

Between the statute and the policy sits your declaration, where the maintenance and insurance obligations are actually allocated. If your board is unsure which document governs which question, start with what the declaration controls and what the bylaws control. Whatever this article says, your state statute and your governing documents control. Check both.

What changed for loans dated on or after July 1, 2026

Fannie Mae rewrote the insurance rules that decide whether a buyer in your building can get a conventional loan. Lender Letter LL-2026-03, issued March 18, 2026, applies to loan applications dated on or after July 1, 2026, and two of its changes land on the board.

The first is the deductible. The old 5% limitation is gone, replaced by a maximum allowable deductible of $50,000 per unit for the required property insurance perils. For most associations that is more room than the old rule gave them.

The second is the HO-6, and it is the one owners will hear about. A borrower has to carry a unit owners policy when any portion of the unit interior or the improvements to it are not covered by the master policy, or when the master policy includes a per-unit deductible. The required amount is the greater of two numbers: enough to restore the interior to its pre-loss condition, or the amount of the master policy's per unit deductible.

Read those two together and the board's choice becomes visible. Every dollar you add to the per-unit deductible to hold the premium down is a dollar of coverage each owner is expected to carry personally. Make that move quietly and owners find out at closing, when a lender tells a buyer the HO-6 is short.

The deductible is the decision, and it is usually made backwards

Boards choose deductibles to fit the premium, when the real question is who absorbs the first loss and whether they can. Get three answers in writing before you sign the renewal.

Ask whether the deductible is per occurrence or per unit, because a $50,000 per-unit deductible on a water loss touching six units is a very different number than it looks on the quote. Ask what your declaration says about who pays it, since some documents charge it to the association and some pass it to the affected owner. Then ask whether the association can actually write that check on a Monday morning, which is a question about the reserve fund and the percentage your association targets, not about the policy.

The premium is an operating expense and gets spread by the usual formula, so a hard renewal lands unevenly. Before owners ask why their share moved more than a neighbor's, have the expense allocation math ready.

The two coverages boards discover too late

Directors and officers coverage protects board members personally from claims tied to governance decisions, and fidelity coverage protects the association's money from the people handling it. Both are easy to trim in a hard market and expensive to lack.

Read the D&O exclusions specifically. CAI warns that many policies exclude claims between the association and its management company, which is exactly the dispute a board is most likely to land in. CAI also recommends that board members sign the insurance application themselves instead of delegating it to the manager, because the application is a representation the association is held to at claim time.

Before your next renewal

1. Pull the current declaration page for every policy, not just the property one, and confirm which coverages you carry.
2. Have your agent state in writing whether the master form is bare walls, single entity or all-in, and point at the language that supports it.
3. Compare that answer against your declaration and your statute, and write down where they disagree.
4. Confirm the per-unit deductible and check it against the $50,000 ceiling that applies to loan applications dated on or after July 1, 2026.
5. Tell owners in plain language what their HO-6 has to cover, deductible figure included, through a channel they actually read.
6. Ask owners for a certificate of insurance once a year, and keep the certificates where the manager can find them during a claim.
7. Review the D&O exclusions with the whole board present before an officer signs the application.

What usually fails is not the coverage decision. It is the recordkeeping around it: the declaration page nobody can find, the owner notice sent once two years ago, the certificates in a former manager's inbox. Noque keeps association documents, owner communication and the delivery record in one place, so the board can show what was sent and to whom when a claim turns into a dispute. To see how that fits your community, talk to a specialist.