Here's a scenario that plays out thousands of times each year: A pipe bursts in your condo building, flooding your unit. You file a claim with your HOA, confident their master policy will handle everything. Then you get the news—the master policy only covers the pipe itself and structural damage. Your ruined floors, damaged cabinets, and soaked furniture? That's on you. This is the coverage gap that catches most condo owners completely off guard.
Understanding the difference between your HOA's master policy and your own condo insurance isn't just helpful—it's essential. These two policies work together like puzzle pieces, and knowing where one ends and the other begins can save you from financial disaster. Let's break down exactly what each policy covers and why you need both.
What Your HOA's Master Policy Actually Covers
Think of your HOA's master policy as insurance for everything shared. It covers the building's exterior—the roof, walls, foundation, and structural elements. It also protects common areas like hallways, lobbies, elevators, stairwells, swimming pools, tennis courts, clubhouses, and gyms. The master policy includes the shared electrical, plumbing, and HVAC systems that service multiple units, along with commercial liability coverage if someone gets injured in those shared spaces.
But here's where it gets tricky: not all master policies are created equal. The coverage your HOA carries typically falls into one of three categories, and this distinction is absolutely critical to understand.
The Three Types of Master Policies: Bare Walls, Single Entity, and All-In
Bare walls coverage, sometimes called studs-in or walls-out, is exactly what it sounds like. The HOA's insurance stops at the drywall. It covers the bare structure, common areas, and building infrastructure, but not fixtures or installations within individual units. With this type of policy, you're responsible for your flooring, cabinetry, countertops, fixtures, paint, and sometimes even the drywall itself. If that pipe bursts, the HOA covers the pipe and structural damage, but you're filing a claim on your own policy for everything inside your unit.
Single entity coverage extends further into your unit. This type of policy covers fixtures, walls, appliances, floor coverings, and cabinetry within individual units—but only the original installations. It doesn't cover personal property, medical payments, or any upgrades and improvements you've made. If you replaced the builder-grade carpet with hardwood flooring or upgraded the kitchen countertops, those improvements are your responsibility to insure.
All-in coverage is the most comprehensive option. The HOA's policy covers the building, common areas, and everything inside your unit, including upgrades and improvements. This sounds ideal, but there's a catch—even with all-in coverage, you still need your own condo insurance. The master policy doesn't cover your personal belongings like furniture, electronics, and clothing. It also doesn't provide personal liability coverage if someone gets injured in your unit.
What Your HO-6 Condo Insurance Covers
Your HO-6 policy picks up where the master policy stops. It covers your personal property—all your belongings including furniture, electronics, clothing, dishes, and linens. It provides dwelling coverage for your unit's interior elements like walls, floors, cabinets, and built-in features. Most importantly, it includes personal liability coverage, typically at least $100,000 but often purchasable up to $500,000, which protects you if someone is injured in your unit or you accidentally damage someone else's property.
Your policy also includes loss of use coverage, which pays for hotel stays and meals if your condo becomes uninhabitable due to a covered event. Medical payments coverage handles medical bills if someone gets hurt in your unit, regardless of fault. And here's a crucial component many people overlook: loss assessment coverage.
Loss assessment coverage protects you when the HOA levies a special assessment to cover expenses that exceed their master policy limits or deductible. This has become increasingly important because master policy deductibles have been rising sharply. Many policies now carry deductibles ranging from $5,000 to $25,000, and coastal condos sometimes face deductibles of $50,000 to $100,000. Standard HO-6 policies typically only provide $1,000 in loss assessment coverage, creating a significant gap. You'll want to increase this coverage substantially.
The Rising Cost Challenge and Coverage Crisis
Condo insurance has entered a challenging period. Master policy costs have doubled since 2022 for many associations. Some buildings have experienced increases of 300% or more in a single year, with extreme cases seeing hikes of 900% to 1,300%. Major insurers have left the condo market entirely in high-risk states, and an estimated 400 buildings in Hawaii alone carry master policies with less than 100% replacement coverage.
This crisis stems from increasing natural disasters, rising reinsurance costs, and construction inflation. For you as a condo owner, it means scrutinizing both your HOA's master policy and your own coverage is more critical than ever. You need to understand exactly what gaps exist and ensure you're adequately protected. The average HO-6 policy costs around $445 annually—a small price compared to the potential financial exposure from inadequate coverage.
How to Get Started and Protect Yourself
First, request a copy of your HOA's master policy and actually read it. Pay particular attention to the type of coverage—bare walls, single entity, or all-in—and note the deductible amount. Understanding these details is the foundation for determining what your own policy needs to cover.
Next, get quotes for HO-6 insurance that specifically addresses the gaps in your master policy. Make sure your dwelling coverage is sufficient based on your master policy type. If you have bare walls coverage, you'll need more dwelling coverage than if you have single entity or all-in. Calculate the replacement value of your personal belongings honestly—most people significantly underestimate this.
Consider increasing your loss assessment coverage well beyond the standard $1,000 limit. Given the rising deductibles on master policies, you might want $25,000 to $50,000 in loss assessment coverage, especially if your building is older or in a high-risk area. Also evaluate your liability coverage—$100,000 might not be enough. Many experts recommend at least $300,000 to $500,000, or even an umbrella policy for additional protection.
The relationship between your HOA's master policy and your condo insurance doesn't have to be confusing. Once you understand what each covers, you can make informed decisions that protect your financial security. Don't wait until disaster strikes to discover you have a coverage gap. Take an hour this week to review both policies, identify any gaps, and adjust your coverage accordingly. Your future self will thank you.
