Condo Insurance vs. HOA Master Policies: Who Pays for What?
One of the most common points of confusion for new condominium owners is the overlapping layers of insurance. You pay your monthly HOA dues, and a portion of that money goes toward a "master policy." So why do you need your own individual insurance policy as well?
Understanding the boundary between the association's responsibility and your own is the key to avoiding massive out-of-pocket expenses. This guide breaks down exactly who pays for what, so you can bridge the gaps in your coverage.
The Big Picture: Common Areas vs. Personal Space
At its simplest, the division of responsibility follows a "walls-out" versus "walls-in" logic.
The HOA Master Policy: Generally covers the building's exterior, the land, and "common elements" shared by all residents. Think of the roof, the lobby, elevators, hallways, and shared amenities like swimming pools or gym facilities.
Your Individual Policy (HO-6): Focuses on the interior of your specific unit. It protects your personal belongings, the improvements you have made, and your personal liability.
The Three Types of Master Policies
To know what you need to cover, you must first identify which type of master policy your association maintains. This is the single most important factor in determining your dwelling coverage limits.
| Policy Type | What the HOA Covers | What You Must Cover |
| Bare Walls-In | The basic structure (studs, wiring, plumbing behind walls). | Everything from the drywall in: flooring, cabinets, sinks, and wallpaper. |
| Single Entity | The structure plus original fixtures and appliances. | Any upgrades or "betterments" (e.g., if you replaced basic carpet with hardwood). |
| All-In (All-Inclusive) | The structure, original fixtures, and even some improvements. | Mostly just your personal belongings (furniture, clothes, etc.). |
Pro Tip: Request the "Certificate of Insurance" from your HOA board. Show this to your insurance agent to ensure you aren't paying for double coverage or, worse, leaving a gap.
Real-World Scenarios: Who Pays?
Understanding theory is one thing, but seeing how it applies to real accidents helps clarify the stakes.
Scenario A: A Pipe Bursts Inside Your Kitchen Wall
If the pipe is part of the building's central system, the HOA master policy typically pays for the plumbing repair. However, if the leaking water ruins your custom hardwood floors, your personal condo insurance must step in to replace the flooring (unless you have an "All-In" master policy).
Scenario B: A Guest Slips in the Lobby
Since the lobby is a common area, the HOA’s liability insurance covers the legal and medical costs. If that same guest trips over a rug inside your living room, the responsibility falls entirely on your personal liability coverage.
Scenario C: A Hailstorm Damages the Roof
The roof is part of the exterior structure. The HOA master policy pays for the repair. However, if the HOA has a high deductible—say $25,000—and they don't have enough in their reserve fund, they may charge every owner a "special assessment" to cover that deductible. This is where your loss assessment coverage becomes a lifesaver.
Key Protections Your Master Policy Will Never Provide
No matter how comprehensive your HOA’s master policy is, it is designed to protect the association's assets, not yours. There are three things a master policy will never cover:
Personal Property: Your furniture, clothing, jewelry, and high-end electronics are only protected by your own policy. If a fire breaks out in the building, the HOA will rebuild the walls, but they won't replace your couch.
Loss of Use: If a fire or major leak makes your unit uninhabitable, your personal policy pays for your hotel and additional living expenses. The HOA is not responsible for housing you during repairs.
Personal Liability: If you are sued for an incident that happens inside your home—or even an incident that happens away from home, like your dog biting someone at the park—only your individual policy provides a legal defense.
How to Bridge the Coverage Gap
To ensure you are fully protected, follow these three steps:
Review the Bylaws: Look for the section on "Insurance" or "Maintenance" to see exactly where your unit boundaries are defined.
Calculate Replacement Cost: Don't just insure for what you paid; insure for what it would cost to buy everything new today at current market prices.
Add Loss Assessment: Ensure your policy has at least $10,000 to $20,000 in loss assessment coverage to protect against those surprise HOA bills.