Three common approaches
A bare walls policy covers the building structure but little or nothing inside units, so owners insure interior walls, floors, cabinets and fixtures. A single entity policy covers the unit as originally built, leaving upgrades and later improvements to owners. An all-in policy covers fixtures and improvements too, including some owner upgrades.
Terms vary by state and building. Some states set rules for what the association must insure. Ask the management company for the master policy summary.
Deductibles
Master policy deductibles can be large. Bylaws may pass part of that deductible to the owner whose unit caused the loss. Loss assessment coverage on an HO-6 may help, depending on wording.
How to read the master policy summary
Ask the management company for the certificate of insurance and the summary of coverage. Look for the coverage type, whether it is described as bare walls, single entity or all-in; the property deductible and any separate wind, hail or earthquake deductible; the liability limit; and whether directors and officers coverage is included. The bylaws or declaration then tell you how the association passes costs to owners.
Matching your HO-6 to the master policy
- Bare walls building means a higher dwelling limit for your interior
- Single entity building means coverage for upgrades made after construction
- All-in building may need only a modest dwelling limit
- A high master deductible points to more loss assessment coverage
When the master policy changes
Associations renew their coverage every year and can change insurers, deductibles or coverage type at renewal. A building that moves to a larger deductible shifts more risk to owners. Ask management to share the new summary each year and review your own limits at the same time.
Disputes over responsibility
When a loss affects both a unit and the common elements, the association's adjuster and your insurer may split the claim. Keep photos, repair estimates and correspondence with the board. If the bylaws are unclear, the association's attorney or a local professional familiar with community association law can explain how they are applied in your state.
Frequently asked questions
Where do I find the master policy?
Ask the board or management company for the certificate and summary of coverage.
Is the master policy deductible my responsibility?
It depends on the bylaws and, in some states, on statute. Many associations can assess the deductible to the unit where the loss began.