Master Policy vs HO-6: What's Actually Covered and What's Not

Why This Matters for Buyers and Owners

Most condo buyers assume that because they pay HOA dues, the building’s insurance covers their unit. This is one of the most expensive misconceptions in condominium ownership. The HOA’s master insurance policy covers the building structure and common areas, but it almost certainly does not cover everything inside your unit — and the boundary between “building” and “unit” is often not where you think it is.

An HO-6 policy — sometimes called a “condo owner’s policy” or “walls-in policy” — covers what the master policy does not: your personal property, your interior finishes, your liability, and often a portion of the master policy deductible that may be passed to you if a claim originates in or affects your unit.

The gap between master policy coverage and what you actually need is where people get hurt financially. A kitchen fire, a burst pipe, a neighbor’s overflowing bathtub — any of these can cause tens of thousands of dollars in damage to your unit’s interior, and the master policy may not pay a cent toward your cabinets, flooring, appliances, or personal belongings. Understanding where your unit boundaries fall is the first step in knowing what you need to insure.

Understanding the relationship between the master policy and HO-6 is not optional. It is essential.

Key Terms and Concepts

Term	Definition
Master Policy	The insurance policy purchased by the HOA that covers the building structure, common areas, and the association’s liability.
HO-6 Policy	The individual unit owner’s insurance policy that covers personal property, interior improvements, personal liability, and loss assessment.
Bare Walls Coverage	A master policy type that covers only the building structure as originally built — the studs, drywall, and basic infrastructure. Interior finishes, fixtures, and improvements are not covered.
All-In (Single Entity) Coverage	A master policy type that covers the building structure plus all interior fixtures and finishes as originally installed. Owner upgrades and improvements are not covered.
Modified All-In Coverage	A variation that covers the building and original interior finishes but may include some modifications or upgrades.
Loss Assessment Coverage	An HO-6 policy endorsement that covers your share of a master policy deductible or an uninsured loss that the HOA passes to owners through an assessment.
Betterments and Improvements	Upgrades you have made to your unit beyond its original condition, such as granite countertops, hardwood floors, or a renovated bathroom.
Subrogation	The process by which an insurance company seeks reimbursement from the party responsible for a loss. If your water heater floods the unit below, the downstairs owner’s insurer may subrogate against you.
Deductible	The amount you or the HOA pays out of pocket before insurance coverage kicks in. Master policy deductibles can be very high.

What to Look For: A Practical Checklist

Understanding the Master Policy

• Determine the master policy type. Is it bare walls, all-in, or modified all-in? This single distinction determines how much of your unit’s interior the HOA’s insurance covers.
• Read the coverage boundary definition. The policy or the governing documents should specify exactly where the association’s coverage stops and the owner’s responsibility begins. This is often described as “studs out,” “paint in,” or by reference to the CC&Rs.
• Check the master policy deductible. High deductibles (ranging from $5,000 to $100,000 or more) are increasingly common. Find out who pays the deductible when a claim is filed. In many associations, the deductible is passed to the unit owner whose unit caused or was affected by the loss.
• Verify coverage amounts. The master policy should cover the full replacement cost of the building. If the building is underinsured, a catastrophic loss could leave the association — and by extension, every owner — with a massive shortfall.
• Ask about excluded perils. Some master policies exclude flood, earthquake, windstorm, or mold. If these risks apply to your area, find out whether the HOA has supplemental coverage or whether you need to purchase individual policies.
• Review the certificate of insurance. This is a summary document showing the carrier, policy number, coverage limits, and deductibles. It does not replace reading the full policy, but it gives you the key numbers quickly.

Setting Up Your HO-6 Policy

• Match your HO-6 to the master policy type.
  • If the master policy is bare walls: your HO-6 needs to cover all interior finishes, fixtures, built-in appliances, flooring, cabinetry, plumbing fixtures, and electrical fixtures.
  • If the master policy is all-in: your HO-6 primarily needs to cover your personal belongings, any upgrades beyond original installation, and your deductible exposure.
• Get adequate dwelling coverage (Coverage A). This covers the interior structure and improvements. For a bare-walls master policy, this number needs to be high enough to rebuild your entire interior. For an all-in policy, it primarily needs to cover your upgrades and betterments.
• Get adequate personal property coverage (Coverage C). This covers your furniture, clothing, electronics, and other belongings. Do a rough inventory. Most people underestimate the value of their possessions by 30-50%.
• Include loss assessment coverage. This is critical. Standard HO-6 policies include a small amount (often $1,000), but you should increase this to at least $25,000-$50,000. It covers your share of the master policy deductible and any insurance-related assessment the HOA passes to owners.
• Include personal liability coverage. If someone is injured in your unit or you cause damage to another unit (such as a water leak), your liability coverage responds. Carry at least $300,000, and consider an umbrella policy for additional protection.
• Consider water backup and sump overflow coverage. Many standard HO-6 policies do not cover damage from water that backs up through drains or overflows from shared plumbing. This endorsement is inexpensive and valuable in multi-unit buildings.
• Review your deductible. A higher deductible lowers your premium but increases your out-of-pocket cost per claim. Choose a deductible you can comfortably afford.

Red Flags and Warning Signs

The association has a bare walls master policy but has not clearly communicated this to owners. If owners do not understand the coverage boundary, many will be underinsured and will not discover it until they file a claim.

The master policy deductible is extremely high relative to unit values. A $50,000 deductible on a building where units sell for $200,000 means each individual claim could cost an owner a significant percentage of their unit’s value. And if the deductible is passed to the responsible unit owner, it falls on one person.

The CC&Rs define the coverage boundary differently than the master policy. This is more common than you would expect. The CC&Rs might say the association insures “studs out” while the master policy covers “all-in.” Or the CC&Rs might assign insurance responsibility for windows to owners while the master policy covers them. Mismatches create confusion and disputes during claims.

The master policy has not been updated to reflect building improvements. If the association renovated all hallways, lobbies, and common areas but did not update the insured value, the building may be significantly underinsured.

Flood, earthquake, or wind coverage is excluded from the master policy in a high-risk area. If the building is in a flood zone, an earthquake-prone region, or a coastal wind zone and the master policy excludes these perils, the association is gambling with every owner’s investment.

The board cannot or will not provide a copy of the master policy declaration page or certificate of insurance. You cannot make informed decisions about your HO-6 coverage without knowing what the master policy covers. This information should be readily available to all owners and prospective buyers.

Practical Examples and Scenarios

Scenario 1: The Bare Walls Surprise

An owner in a building with a bare walls master policy experiences a kitchen fire. The fire destroys the cabinets, countertops, flooring, and appliances. The master policy pays to repair the drywall, studs, and electrical wiring behind the walls. But it does not pay for any of the interior finishes.

The owner’s HO-6 policy has only $20,000 in dwelling coverage because the owner assumed the master policy covered the interior. The actual cost to restore the kitchen to its pre-fire condition is $65,000. The owner is responsible for the $45,000 gap out of pocket.

With a properly calibrated HO-6 with $80,000 or more in dwelling coverage, the owner would have been fully covered.

Scenario 2: The Deductible Pass-Through

A pipe bursts in unit 302, causing water damage to units 202 and 102 below — a common scenario in plumbing leak disputes. The total damage to the building is $75,000. The master policy has a $25,000 per-occurrence deductible.

The association’s governing documents state that the master policy deductible is the responsibility of the unit where the loss originated. The owner of unit 302 is now responsible for $25,000. If that owner has an HO-6 policy with $50,000 in loss assessment coverage, the HO-6 insurer may cover this deductible pass-through (subject to the HO-6 deductible and policy terms). If not, the owner of unit 302 pays $25,000 out of pocket.

Scenario 3: The All-In Policy with Upgrades

An owner in a building with an all-in master policy renovated their unit extensively — new hardwood floors, custom cabinetry, quartz countertops, and high-end bathroom fixtures. Total renovation cost: $80,000.

A water leak damages the kitchen and one bathroom. The master policy covers the original finishes as they were installed when the building was built (basic laminate counters, standard cabinets, vinyl flooring). The cost to replace the original finishes is covered. But the difference between the original-spec materials and the owner’s upgraded materials — roughly $50,000 — is not covered by the master policy.

The owner’s HO-6 needs adequate betterments and improvements coverage (part of the dwelling coverage) to bridge this gap.

Scenario 4: The Coverage Gap Nobody Noticed

A coastal condo building’s master policy excludes wind damage above the first floor (a “wind exclusion” that applies to upper floors in some coastal markets). A hurricane damages the exterior and roof, and wind-driven rain destroys the interiors of units on the top three floors.

The master policy covers structural damage to the first floor only. The HOA assesses all owners $30,000 each to cover the uninsured upper-floor damage. Owners who have loss assessment coverage on their HO-6 policies can make claims against that coverage. Owners without it — or with only the standard $1,000 — bear the full cost.

Questions to Ask

1. What type of master policy does the association carry — bare walls, all-in, or modified all-in?
2. Can I get a copy of the master policy declaration page or certificate of insurance?
3. What is the master policy deductible, and who is responsible for paying it when a claim is filed?
4. Does the master policy exclude any perils, such as flood, earthquake, windstorm, or mold?
5. How is the coverage boundary between the master policy and individual unit responsibility defined in the CC&Rs?
6. When was the building’s insured value last appraised or updated?
7. Has the association filed any insurance claims in the past five years? Were any claims denied?
8. Are there any upcoming changes to the master policy coverage or premium that owners should know about?

Frequently Asked Questions

Do I need an HO-6 policy if my building has an all-in master policy?

Absolutely yes. Even with an all-in master policy, you still need HO-6 coverage for: personal property (furniture, electronics, clothing), any upgrades or improvements beyond the original unit finishes, personal liability, additional living expenses if your unit becomes uninhabitable, and loss assessment coverage for your share of the master policy deductible. The all-in policy reduces the amount of dwelling coverage you need on your HO-6, but it does not eliminate the need for one.

How much does an HO-6 policy cost?

HO-6 policies are generally affordable, typically ranging from $200 to $600 per year for standard coverage. The cost varies based on location, building type, coverage amounts, deductible, and your claims history. Given the protection it provides, an HO-6 policy is one of the most cost-effective risk management tools available to condo owners. Increasing your coverage from the bare minimum to comprehensive protection often adds only $100-$200 per year.

What happens if I do not have an HO-6 and my unit is damaged?

You bear the full cost of any damage not covered by the master policy. For a bare-walls building, that means everything inside your unit -- cabinets, flooring, fixtures, appliances, and all personal property. You also have no liability protection if someone is injured in your unit or if you cause damage to a neighboring unit. And if the HOA passes a master policy deductible or uninsured loss to you through an assessment, you pay the full amount out of pocket. The financial exposure of going without an HO-6 can easily reach tens of thousands of dollars in a single incident.

Can my mortgage lender require me to carry an HO-6 policy?

Yes, and most do. Lenders require evidence that both the master policy and your individual HO-6 policy meet certain minimums. The lender wants to ensure that their collateral (your unit) is adequately insured. Even if your lender does not explicitly require an HO-6, carrying one is strongly recommended.

How do I find out what type of master policy my building has?

Start by asking the property management company or HOA board for a copy of the insurance certificate or declaration page. You can also review the CC&Rs, which typically describe the association's insurance obligations and the coverage boundary between common elements and individual units. When you obtain your HO-6 policy, share the master policy details with your insurance agent so they can calibrate your coverage to fill the gaps.

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Important: This article is for educational purposes only and does not constitute legal, financial, or insurance advice. Insurance requirements, coverage boundaries, and responsibility allocations vary significantly by state, policy type, and individual association. Always check your governing documents — including the CC&Rs, bylaws, and any amendments — to understand how your association defines the boundary between common elements and individual units, who is responsible for insuring what, and how deductibles are allocated. Consult with a licensed insurance professional and, where appropriate, a real estate attorney for guidance specific to your situation.

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