Where Master Policy Ends Unit Owner Begins
The master policy covers the building and common areas. Your HO-6 covers everything from your walls in, plus belongings.
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Your HOA's master policy is written one of two ways, and it changes what your HO-6 needs to do. Under an "all-in" or "single entity" policy, the association covers original drywall, cabinets, and fixtures, so your HO-6 mainly needs to cover upgrades you made. Under a "bare walls" policy, the association stops at the studs, and your HO-6 has to cover everything built out from there, including floors and built-in cabinets. Your HOA's governing documents or the master policy's declarations page says which one applies.
The gap between these two versions runs into tens of thousands of dollars. A unit owner under a bare walls master policy who insures like it's all-in could find a kitchen remodel, flooring, and built-in cabinets uncovered after a fire or burst pipe. Checking which version your HOA carries, then matching your HO-6 dwelling limit to it, is the difference between a covered rebuild and paying out of pocket.
What happens when a neighbor's pipe floods your unit
Water damage from another unit is one of the most common claims in condo and townhome living, and the first question is whose policy pays. If a pipe bursts in the unit above and water comes through your ceiling, the damage to your walls, floors, and belongings is typically handled by your own HO-6 policy first, regardless of who caused it. Your insurer may then seek reimbursement from the neighbor's insurer if negligence was involved, but that process happens between the insurance companies. You file your claim, your policy responds, and the dwelling coverage and personal property coverage on your HO-6 are what determine how much you get back.
The dwelling coverage amount on your HO-6 matters even under an all-in master policy. The association's policy may rebuild the structure, but the water damage to your flooring, drywall finish, and personal items still runs through your own coverage. If your HO-6 limit is too low, repairs from a neighbor's leak could leave you covering part of the cost yourself even though you did nothing wrong.
Loss assessment coverage handles a different problem. When damage affects common areas or the master policy doesn't fully cover a shared loss, like a fire in the building or storm damage to the roof, the HOA can bill unit owners through a special assessment to make up the difference. Most HO-6 policies include a set amount of loss assessment coverage, often a few thousand dollars, but it can be increased. A master policy with a high deductible, perhaps tens of thousands of dollars for the whole building, can get passed down to unit owners as an assessment. A low loss assessment limit on your HO-6 won't stretch far against that. Checking the master policy's deductible against your own loss assessment limit is worth doing before a claim happens, not after.
Townhomes complicate this further because ownership structures vary. Some townhome communities are set up like condos, with an HOA master policy covering shared walls and roofs, in which case an HO-6 makes sense. Others have the homeowner owning the structure outright, including the roof and exterior walls, with no master policy at all. A standard homeowner's policy, not an HO-6, is the right fit there, since there's no building-level coverage to coordinate with. Your HOA agreement or property deed will say which structure applies, and that answer determines which policy type you're shopping for in the first place.
What happens when the HOA's claim doesn't cover the full repair bill
A special assessment after a loss is different from the routine assessments an HOA uses for repaving a parking lot or repainting hallways. This kind comes after an insurance event, when the master policy's payout falls short of the actual repair cost. A fire that guts part of the building, a storm that takes off a section of roof, or a structural problem that was underinsured can all leave the HOA short. The board votes to bill unit owners directly for the difference, split according to the formula in the governing documents, usually by unit size or ownership percentage.
Loss assessment coverage on your HO-6 is what responds to that bill, up to its limit. If the assessment is $8,000 and your policy carries $5,000 in loss assessment coverage, you're responsible for the remaining $3,000 yourself. Because the gap between a building's master policy deductible and its payout can run into tens of thousands of dollars per unit in a bad loss, many unit owners carry more than the default amount. Raising this limit is usually a small increase in premium compared to the exposure it covers.
There's a timing detail worth knowing. Loss assessment coverage on an HO-6 typically applies to assessments tied to property damage, like the fire or storm scenario above. It generally does not cover assessments for things like a lawsuit judgment against the HOA or a shortfall from poor financial planning, unless your policy specifically extends to those. The assessment notice from the HOA should state the reason for the charge, and that reason is what determines whether your loss assessment coverage applies at all.
None of this replaces checking the master policy itself when you're buying or renewing. A board that carries a high deductible to keep its own premium low is effectively shifting more risk onto unit owners when a claim happens. Asking the HOA for the master policy's deductible and coverage limits, then sizing loss assessment coverage on your own HO-6 against that number, is a more useful exercise than guessing at a round figure. The declarations page of the master policy, which the HOA is typically required to provide on request, has the numbers that matter here.
Before you renew
Ask your HOA for the master policy's declarations page. Check whether it's bare walls or all-in, note the deductible, and match your HO-6 dwelling limit and loss assessment coverage against those two numbers.
