How to Read a Condo Master Insurance Policy
Check the declarations page for what it insures, then check your bylaws for the interior wall clause that fills the gap.
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Start with the line that tells you whether the master policy is bare walls or all-in. Bare walls stops at the studs, so your HO-6 has to cover cabinets, flooring, fixtures, and any upgrades you made. All-in reaches further, sometimes to original fixtures the building installed. Call the HOA's insurance agent if the wording isn't clear, since the declarations page uses the exact term. That one line decides how much dwelling coverage your own policy needs to carry.
If the master policy is bare walls and the HO-6 was bought for the minimum, a kitchen fire or burst pipe can leave thousands in cabinets and flooring with no coverage behind them. Loss assessment coverage matters too, since a shared roof or lobby claim can turn into a bill mailed to every owner. Comparing policies now shows what each one actually fills in.
What happens when water comes from the unit next door
Water doesn't ask permission before it crosses a wall. When a pipe bursts in the unit above and soaks the ceiling below, the question is whose policy answers first. The answer depends on where the water started and what it touched. If the master policy is bare walls, the building's coverage generally handles the structure itself, the studs, the shared pipes, the subfloor. Your HO-6 handles what's yours inside that shell. That means the drywall finish, the flooring, the cabinets, anything you'd have to replace to live there again. The neighbor's own HO-6 may come into play too if their negligence caused the leak, though proving that isn't always simple and isn't always worth the fight.
Loss of use coverage sits inside your HO-6 for exactly this reason, even though it feels like a small line item. If the unit is unlivable while drywall dries out or cabinets get replaced, that coverage pays for a hotel or a short-term rental during the repair. Without it, a two-week displacement comes out of pocket on top of whatever the deductible already costs.
Townhomes complicate this because the line between unit and building isn't always the same as it is in a condo. Some townhome associations insure only the land and shared amenities, leaving each owner to insure the entire structure of their own unit, walls, roof, and foundation included, much like a single-family home. Others run a master policy closer to a condo's, covering the building shell and leaving interiors to the owner. The HOA's governing documents say which model applies, and that answer changes how much dwelling coverage the owner's own policy needs to carry. A townhome owner who assumes the association insures the roof, when in fact it doesn't, can find that out the expensive way after a storm.
Loss assessment coverage matters again here, separate from how the water damage itself gets split. If the association's master policy has a high deductible, say five or ten thousand dollars, a shared pipe failure can trigger a claim that leaves the association short. The association can then bill owners for that deductible through a special assessment. A policy's loss assessment limit decides how much of that bill gets covered versus paid directly out of pocket. Checking that limit against what the association's bylaws allow it to assess is worth doing before a claim forces the question.
Who pays the deductible when the master policy has a claim
Every master policy has its own deductible, and that number belongs to the association, not to any one owner. When the building files a claim, whether for a roof leak, a fire in the stairwell, or burst pipes in a shared wall, the association pays that deductible first, often from its reserve fund. If the fund can't cover it, the bylaws usually let the board bill owners directly through a special assessment, split evenly or by unit share depending on how the documents are written.
Loss assessment coverage in an HO-6 exists for this exact moment. It doesn't cover the water damage itself or the cabinets that need replacing. It covers the bill the association sends afterward, the one tied to the master policy's deductible or to damage that exceeds the master policy's limits entirely. A five-thousand-dollar master deductible split across forty units doesn't sound like much per owner, but a ten-thousand-dollar deductible on a building with ten units is a different story, and so is a claim that outstrips the building's coverage limit altogether.
The amount of loss assessment coverage a unit needs depends on the size of the building, the master policy's deductible, and how much the bylaws allow the board to assess at once. A standard HO-6 often includes a modest amount by default, sometimes a few thousand dollars, which may not come close to covering a large building's exposure. Reading the association's financial statements, not just the insurance declarations, shows whether the reserve fund is healthy enough to absorb a big deductible without reaching for owners first.
Some associations carry fidelity bond coverage or umbrella policies that change this picture, covering losses the master policy wouldn't touch at all, like board mismanagement of funds. None of that replaces the need for an owner's own loss assessment limit to match what the building could plausibly bill. A unit owner who checks this once, when buying the HO-6 or renewing it, avoids finding out the hard way that the coverage bought for pennies wasn't enough for the bill that actually arrived.
Before you close this page
Pull up your HO-6 and find the dwelling coverage limit and the loss assessment limit. Compare both against the master policy's deductible and what the bylaws allow the board to assess.
