Owning a condominium means owning part of a shared building, and the insurance follows that structure. Two policies work together: the association's master policy and your own HO-6 unit owner's policy.
The critical question is where one ends and the other begins. That line is not set by industry convention. It is set by your association's governing documents, and it differs between buildings.
The two-policy structure
The master policy is bought by the association and paid for through your dues. It covers the building structure and the common areas: roof, exterior walls, hallways, elevators, lobby, grounds, and shared systems. It also carries liability coverage for the common areas.
Your HO-6 covers what the master policy does not: some portion of the interior, your personal property, your personal liability, your additional living expenses, and loss assessment.
The overlap point is the interior of your unit, and that is where the three master policy structures matter.
The three master policy structures
This determines how much interior coverage you actually need, and it is the single most consequential thing to establish.
| Structure | What the association covers | What you must insure |
|---|---|---|
| Bare walls-in | The structure only, essentially up to the unfinished walls | Drywall inward: finishes, flooring, cabinets, countertops, fixtures, built-ins, and often plumbing and wiring within the unit |
| Single entity | The structure plus original builder-grade finishes as installed | Any upgrades and improvements beyond the original specification, plus personal property |
| All-in (all-inclusive) | Structure plus original fixtures, finishes and improvements within the unit | Mostly personal property, upgrades made after purchase, and liability |
A bare walls-in arrangement can require substantially more Coverage A on your HO-6 than an all-in arrangement for an identical unit. Setting your limit without knowing which applies is guesswork.
The single entity structure carries a subtle trap. It covers original builder-grade finishes, which means the granite counters and hardwood floors a previous owner installed are yours to insure, and you may not know they were upgrades.
Read the documents
Two things to obtain, and both are ordinarily available to owners on request:
The master policy declarations page. This shows the coverage, the limits, and critically the master policy deductible.
The bylaws or declaration of covenants. This is the governing document that defines who insures what. When the bylaws and the insurance policy appear to disagree, the bylaws generally define the obligation. This is the document that tells you whether you are bare walls, single entity, or all-in.
If you are buying, request both before closing rather than after. If you already own and have never read them, this is worth an afternoon.
What an HO-6 covers
Coverage A, interior and improvements. The portion of the unit you are responsible for under the bylaws, plus any improvements and betterments you or a previous owner installed. Set this based on what it would cost to restore the interior, not on the market value of the unit.
Personal property. Your belongings, generally on a named perils basis, with the same sublimits and scheduling considerations as any other policy.
Personal liability and medical payments. For incidents within your unit and arising from your activities.
Loss of use. Additional living expenses if the unit becomes uninhabitable after a covered loss. In a condo this matters, because a building-wide event can displace you for a long time while shared systems are repaired.
Loss assessment. Covered separately below, because it deserves it.
Loss assessment is the sleeper coverage
This is the part of condo insurance that surprises people, and the part most worth getting right.
When a loss exceeds the master policy's limits, or falls within the master policy's deductible, the association can levy a special assessment on all unit owners to make up the difference. Your share is a personal obligation.
Loss assessment coverage on your HO-6 pays your share of such an assessment, subject to its own limit and conditions.
Two things make this important:
Master policy deductibles can be very large. A high deductible on a multi-million-dollar building is normal, and it is often apportioned among owners when a claim occurs. Some associations' documents specifically allocate the master deductible to unit owners.
Base loss assessment limits are often low, commonly a nominal amount included by default, and increasing the limit is usually inexpensive relative to the exposure.
Questions to ask: what is the master policy deductible, do the bylaws allocate it to owners, and is my loss assessment limit anywhere near my potential share? Note also that some policies restrict loss assessment coverage for assessments arising from certain perils, so read the conditions.
Water damage, the most common condo claim
Water is the dominant condo loss, because units share plumbing and stack vertically.
A supply line failure in an upper unit damages that unit, the units below, and common areas. Establishing responsibility involves the bylaws, the source of the water, and sometimes negligence. Your liability coverage may respond for damage to units below; your own interior coverage responds to your unit; the master policy handles common elements.
Practical steps: know where your shutoff is, consider leak detection devices, and ask whether your association has rules about supply lines and water heaters. See water damage and what home insurance covers.
What neither policy covers
Flood is excluded, including storm surge, on both the master policy and your HO-6 unless separately purchased. Associations can buy NFIP coverage for the building, and unit owners can buy contents coverage and in some cases building coverage for their interior. In a ground-floor or basement-level unit this is worth investigating. See flood insurance and the NFIP.
Earthquake is likewise separate.
Deferred maintenance of building systems is an association budgeting problem, not an insurance one, which is why reserve studies matter to owners.
If you rent your unit out
An HO-6 written for an owner-occupant is not designed for a rented unit. Landlord coverage on a condo is a different arrangement, and your association's rules may also restrict rentals. Tell your insurer before renting it out, since discovering the change at claim time can create a coverage problem.
Your tenant needs their own renters policy for their belongings and liability.
A checklist before you set limits
- Obtain the master policy declarations and the bylaws
- Establish which structure applies: bare walls-in, single entity, or all-in
- Find the master policy deductible and whether owners are allocated a share
- Set Coverage A on the cost to restore your interior obligations, including upgrades
- Review your loss assessment limit against a realistic share of a large assessment
- Check whether personal property is ACV or replacement cost
- Ask about flood, particularly on lower floors
- Revisit after any renovation, since upgrades shift what you must insure
Related reading: what homeowners insurance covers, how much dwelling coverage do you need, and filing a home insurance claim.
Master policy structures, bylaw allocations, loss assessment terms and available coverage vary by association, by insurer, by policy and by state, and the governing documents and policy language control. For your own unit, consult your association, a licensed agent, and your state's Department of Insurance. You can also request home insurance quotes and get connected with licensed providers who cover your area.