Living in a condominium, townhome or planned development comes with a homeowners association (HOA) and a master insurance policy paid through your dues. Many owners assume the master policy "covers the building," so they buy minimal coverage of their own, or none. Then a pipe bursts, a fire spreads from a neighbor's unit, or the association levies a special assessment after a large loss, and the owner discovers gaps. This guide explains where master policies typically stop and what you need to fill the space.
Step one: read your governing documents
Your association's CC&Rs (covenants, conditions and restrictions) and bylaws define who is responsible for insuring what. They also define the boundaries of each unit. In California, the Davis-Stirling Common Interest Development Act governs associations, and Civil Code §5300 requires associations to give members an annual budget report that includes a summary of the association's property, general liability, earthquake, flood and fidelity insurance, including the insurer, coverage types, limits and deductibles: California Legislative Information – Civil Code §5300. Ask your manager for the current insurance summary and the full policy declarations if you need them.
Types of master policies
Master policies generally fall into three types:
- Bare walls (or "studs out"): covers the building structure and common areas only. Owners insure everything inside their unit: drywall, flooring, cabinets, fixtures and built-in appliances.
- Single entity (or "original specifications"): covers the structure plus interior fixtures as originally built. Owners insure upgrades, such as replacing builder-grade countertops with stone.
- All-in (or "all inclusive"): covers the structure, original fixtures and upgrades. Owners still insure personal property and liability.
Townhome and planned-development associations are different again: owners may be responsible for insuring the entire structure of their home, with the HOA insuring only common areas like pools and clubhouses. Getting this wrong can leave the whole house uninsured.
Gap 1: the interior of your unit
If the master policy is bare walls or original specifications, your HO-6 (condo unit owners) policy needs enough dwelling (Coverage A) to rebuild what you're responsible for, including improvements and betterments. Estimate the cost to replace floors, cabinets, counters, bathrooms, built-ins and interior walls at today's construction costs, not your purchase price.
Gap 2: the master policy deductible
Master policy deductibles can be large, sometimes tens of thousands of dollars, and many CC&Rs allow the association to pass the deductible to the owner whose unit was the source of the loss or to all owners. Earthquake deductibles on master policies are often a percentage of the building's value, which can mean a very large share per unit. Ask:
- What is the master policy deductible for all perils, water damage, and earthquake (if purchased)?
- Do the CC&Rs allow the deductible to be charged to owners?
Gap 3: loss assessment
Loss assessment coverage on your HO-6 helps pay your share of an assessment levied after a covered loss to common property, or when the master policy's limits or deductible fall short. Many HO-6 policies include a small default amount, often too little. Higher limits are usually inexpensive. Note that loss assessment coverage typically follows covered perils on your own policy, and earthquake assessments generally require earthquake loss assessment coverage. In California, the CEA offers loss assessment coverage on its condo policy: California Earthquake Authority.
Gap 4: water damage
Water is a frequent source of condo claims and disputes: a supply line breaks upstairs, and water damages three units below. Questions that matter:
- Who's responsible for pipes inside walls vs. fixtures?
- Does the master deductible apply, and can it be charged to the unit owner where the leak started?
- Does your HO-6 cover water backup from drains and sewers? That's often an add-on.
- Is gradual leakage excluded? Most policies exclude damage from long-term, repeated seepage.
Practical steps include leak detectors, automatic shut-off valves, and replacing old supply hoses.
Gap 5: personal property and loss of use
Master policies don't cover your belongings. Your HO-6 covers personal property and loss of use (additional living expenses) if you can't live in the unit after a covered loss, even when the damage started elsewhere in the building. Use our free home inventory template to estimate how much property coverage you need.
Gap 6: personal liability
The master policy covers the association's liability for common areas. It doesn't cover your personal liability for an injury inside your unit or damage you cause to others, such as an overflowing bathtub that damages a neighbor's unit. Your HO-6 provides personal liability. A personal umbrella can add higher limits; see our umbrella guide.
Gap 7: earthquake and flood
Most master policies exclude earthquake and flood, and many associations don't buy those coverages because of cost. Owners can buy earthquake coverage for their unit and loss assessments, and flood insurance for their unit through the NFIP or private insurers. Our California earthquake insurance guide and flood guide explain options. FEMA explains NFIP coverage for condo units, including the Residential Condominium Building Association Policy (RCBAP): FEMA – Flood insurance.
Gap 8: underinsured master policies
Some associations carry building limits that haven't kept up with construction costs, or choose high deductibles to manage rising premiums. If the master policy falls short after a major loss, owners may face large special assessments. Review the association's insurance summary, attend budget meetings, and ask whether a recent appraisal supports the building limit.
Renting out your unit
If you rent your condo to tenants, tell your insurer. You may need an HO-6 written for rental use, often with loss of rents coverage, and your tenants should carry renters insurance. Our landlord insurance guide has more.
Mortgage lender requirements
Lenders and loan programs, such as Fannie Mae, Freddie Mac and FHA, have their own requirements for condo master policies and individual HO-6 coverage, which may include walls-in coverage when the master policy doesn't provide it. Your lender will tell you what it requires; meeting the requirement doesn't necessarily mean your coverage is adequate.
HOA owner checklist
- ☐ Get the CC&Rs and the association's insurance summary
- ☐ Identify the master policy type: bare walls, single entity or all-in
- ☐ Set HO-6 dwelling coverage for your share, including upgrades
- ☐ Ask about master deductibles and whether owners can be charged
- ☐ Raise loss assessment limits, including earthquake loss assessment
- ☐ Add water backup coverage
- ☐ Insure personal property, loss of use and liability
- ☐ Consider earthquake and flood coverage for your unit
- ☐ Tell your insurer if you rent the unit out
Contact Alishahi Insurance or call (877) 711-4545 for an HO-6 review.
Frequently asked questions
Does my HOA master policy cover my condo's interior?
It depends on the policy type. Bare walls policies cover only the structure, while single entity and all-in policies cover more. Check your CC&Rs and the master policy.
What is loss assessment coverage?
Coverage on your HO-6 that helps pay your share of an assessment the association levies after a covered loss to common property.
Can the HOA charge me the master policy deductible?
Many CC&Rs allow the association to pass the deductible to the responsible owner or to all owners. Read your governing documents.
Do townhome owners need a condo policy or a homeowners policy?
It depends on whether the association or the owner insures the structure. Some townhome owners need full homeowners coverage.
Does the master policy cover earthquakes?
Usually not. Owners can buy earthquake coverage for their unit and earthquake loss assessments.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.