Condo Insurance Explained: How Your HO-6 Policy and HOA Master Policy Work Together

When you buy a condo, you share ownership of the building with your neighbors, and you share the insurance, too. Your association carries a master policy, and you carry your own HO-6 policy. The challenge is that the line between them isn't the same in every building, and gaps between the two are common.

Start with your association's master policy

Your association's governing documents, usually the declaration and bylaws, define what the master policy must cover. Master policies generally fall into three categories:

• Bare walls: covers the building structure and common areas only. You insure everything from the drywall in, including flooring, cabinets, and fixtures.
• Single entity: covers the structure plus the original fixtures and finishes in each unit. You insure upgrades and improvements, plus your belongings.
• All-in: covers the structure, fixtures, and most improvements. You insure your belongings, your liability, and your share of assessments.

Ask your association manager for the master policy's declarations page and the section of your governing documents that describes the insurance requirements. Those two documents tell you how much coverage your HO-6 needs.

What your HO-6 policy covers

• Dwelling or walls-in coverage for the parts of your unit the master policy doesn't insure
• Personal property, including furniture, electronics, and clothing
• Loss of use, which pays for temporary housing if your unit is uninhabitable after a covered loss
• Personal liability for injuries in your unit or damage you cause to others
• Loss assessment, which pays your share of certain association assessments

The most overlooked coverage: loss assessment

When the association has a loss that falls within its master policy deductible, or a claim that exceeds the master policy's limits, it can divide the cost among owners as a special assessment. Master policy deductibles can be large, and a single assessment can run into thousands of dollars per unit.

Many HO-6 policies include only a small amount of loss assessment coverage by default. Increasing it is usually inexpensive. Also check whether your policy limits how much it will pay toward an assessment that comes from the master policy deductible, since some policies restrict this.

Water damage between units

Water is one of the most common condo claims. A leak from your unit can damage the unit below, and a leak from above can damage yours. Who pays depends on where the water started, what was damaged, and what your governing documents say. Your personal liability coverage may respond if you're responsible for damage to a neighbor's unit, and your walls-in coverage may respond for damage to your own interior.

If you rent your condo out

If you rent your unit to a tenant, even occasionally, tell your agent. Owner-occupied HO-6 policies may not respond the same way for a rented unit. A policy written for landlord use can include loss of rental income and liability protection that fits how the unit is actually used.

Flood isn't covered by either policy

Neither your HO-6 nor the master policy covers flood. The association may carry its own building flood policy, but it won't cover your belongings or your interior improvements. Ground-floor units and garage-level storage are especially exposed, and a separate flood policy for unit owners can fill that gap.

The bottom line

Condo insurance works best when someone reads both policies together. If you've never compared your HO-6 to your association's master policy, a short review can show you exactly where your coverage starts and stops.

This article is for general educational purposes only and does not constitute legal or insurance advice. Master policy terms, association governing documents, and loss assessment provisions vary. Actual policy language governs all claims.