Condo Association Insurance — What It Covers & Why It Matters in 2025

Introduction

Condo Association Insurance is often the most misunderstood policy affecting condo owners. The Condo Association Insurance — the master policy — protects shared structures and common areas, but the details (who pays, what’s excluded, and how deductibles are handled) can vary wildly. In 2025, with stronger storms, evolving regulations, and higher rebuilding costs, boards and owners must understand how the master policy interacts with individual HO-6 policies so they’re not left holding surprise bills or facing underinsured losses.

This article walks you through what the master policy covers, how it differs from an HO-6, the types of master policies, state-specific rules (with a focus on Florida), claims, costs, and practical steps to avoid coverage gaps or surprise special assessments.

What Is Condo Association Insurance?

A condo association insurance policy — commonly called the master policy — is purchased by the condominium association to protect the building’s structure and common areas, and to provide liability protection for the association and its board. It acts as the blanket insurance for everything the association owns and manages, from roofs and exterior walls to elevators and pool decks. III

Difference from individual condo insurance (HO-6).
Individual condo owners buy HO-6 policies to cover personal property, personal liability, and sometimes improvements to the interior of their unit. The master policy typically covers shared structure and common elements; the HO-6 fills in the rest, especially contents, personal liability, and loss-assessment exposure. Think of the master policy as the building’s “outer shell” insurance and the HO-6 as your personal “inside the box” protection.

Who pays for it (owners via HOA fees vs. direct HOA responsibility).
The association pays the premium for the master policy. Practically, those costs are funded through HOA dues, reserve accounts, or special assessments. Unit owners should read their declaration and bylaws to determine whether the association’s master policy covers certain interior items (and therefore whether owners need to buy additional HO-6 building-coverage endorsements).

What Does a Condo Association Insurance Policy Cover?

Property coverage (e.g., roof, walls, hallways, elevators).

• Building structure: exterior walls, roof, foundations.
• Common areas: lobbies, hallways, elevators, stairwells, fitness centers, pools, and landscaped grounds.
• Mechanical equipment serving common systems: boilers, centralized HVAC, elevators.
  The precise items insured depend on the master policy wording and the association’s governing documents.

Liability protection for shared areas.
The master policy provides condo HOA liability coverage for accidents that occur in shared spaces (e.g., slip-and-fall in a lobby). This includes defense costs, settlements, and judgments up to the policy limits. Adequate liability limits help protect reserve funds and reduce the chance boards face personal liability claims. III

Loss assessment coverage.
If the association’s master policy has insufficient limits or a large deductible, the association may charge a special assessment to unit owners. Individual HO-6 policies can include loss assessment coverage to protect owners against this financial hit; owners should check and increase that endorsement if necessary.

Optional flood and earthquake coverage.

• Flood insurance is not included in standard property policies and must be purchased separately (NFIP or private flood insurers). Associations in Special Flood Hazard Areas (SFHAs) often need flood policies; owners in flood zones should coordinate with the association on who insures what. FEMA
• Earthquake coverage is typically optional and sold as an endorsement or separate policy.
• Directors & Officers (D&O) and Employment Practices Liability (EPL) protect boards and associations from governance-related lawsuits and are common add-ons.

Link to common HOA agreements.
Declarations and bylaws normally state the allocation of insurance responsibilities. Owners should compare the master policy wording to the declaration language to avoid assuming coverage that doesn’t exist.

Understanding the Condo Association Master Policy

Master policies are written in different ways; the three most common types are All-In (Special Form), Bare Walls, and Single Entity. The terminology can vary by state and insurer, but the practical effects are consistent.

Types explained:

Policy Type	What it typically covers	Owner impact
All-In / Special Form	Building exterior and many interior improvements or fixtures as originally installed	Owners mainly need contents, liability, and possibly upgrades coverage
Bare Walls (Unit Owner Responsibility)	Exterior shell and common areas only; interior finishes often excluded	Owners must insure interior finishes, floors, cabinets, fixtures
Single Entity	Entire property insured as one unit; claims allocated across units	Unit owner responsibilities and assessment calculations are handled per declaration

(Names vary; always check the policy form and the declaration for precise limits.)

Real-life example of coverage differences.
If the corridor ceiling collapses from a plumbing failure: under an All-In policy, structural and many interior repairs may be covered by the master policy; with a Bare Walls policy, owners could be on the hook for interior ceilings, fixtures, or finishes.

Why clarity matters for unit owners.
Ambiguity in policy type or declaration language is the most common post-claim dispute between associations and owners. Clear policy definitions reduce litigation risk and make budgeting (for reserves and HO-6 endorsements) straightforward.

Common Condo Association Insurance Gaps

Gaps between HOA master and personal coverage.

• Interior finishes can be excluded from the master policy, leaving owners without coverage for floors, built-in cabinets, or fixtures.
• Large association deductibles (sometimes tens of thousands) can be charged back to owners via loss assessment unless owners carry adequate loss-assessment limits.

Misunderstanding deductibles and liability.
Owners sometimes assume their HO-6 is secondary and will automatically respond to any loss; in reality, responsibility depends on the declaration and the cause of damage.

Example: Water damage claims or roof repair disputes.
A leak from a common roof might be covered by the master policy for roofing repairs, while interior drywall, flooring, and personal property may be split between the master policy and individual HO-6s. If the master policy’s deductible is high and the board decides to prorate it, owners without loss assessment coverage could face significant bills.

State Requirements & Special Considerations (with Focus on Florida)

Insurance obligations vary by state. Two layers matter most: federal flood rules and state condominium statutes.

Florida: Flood insurance rules, inspection laws, and reserve requirements
Florida’s condominium statute (Chapter 718) requires associations to carry adequate property insurance as defined by the statute and contemplates flood coverage and self-insurance mechanisms in certain situations. The statute also governs what aspects of units and common elements the association must insure and allows for self-insurance only if certain statutory requirements are met. Post-Surfside reforms and ongoing legislative changes have increased inspection, reserve, and insurance scrutiny in Florida condo law. In some high-risk flood zones or where federal financing is present, flood insurance (via NFIP or private market) becomes effectively required.

California: wildfire and seismic considerations
California associations face underwriting challenges related to wildfires and earthquakes; as a result, many boards add mitigation measures and owners consider earthquake endorsements or separate earthquake policies.

Other states: coastal windstorm considerations (Texas, Louisiana)
In coastal states where windstorm pools or separate wind underwriting exist, associations and owners need to be careful about what perils are covered by the master policy and if windstorm coverage is separate or excluded.

Condo Association Insurance Claims — How They Work

Steps in filing a master policy claim

1. Report the loss to management and the association’s insurance agent.
2. Emergency stabilization to prevent further damage — keep invoices/receipts.
3. Insurer adjuster assignment and joint inspection.
4. Scope & estimate are prepared for common elements and structural repairs.
5. Payment less deductible — if a shortfall exists, the association may levy a special assessment.

Role of condo association insurance claim attorneys
When claims are denied, underpaid, or coverage interpretation is contested, a condo association insurance claim attorney can represent the association or owners. Attorneys negotiate with insurers, interpret declarations, and litigate when necessary. Their involvement is especially common in large claims or when multiple units and complex causation issues are involved.

Common challenges and resolutions

• Causation disputes: Parties may disagree whether damage resulted from a covered peril or from maintenance neglect. Documentation (maintenance logs, inspection reports) is vital.
• Underinsurance: Frequent reserve studies and periodic appraisals reduce the chance of underinsurance.

Cost of Condo Association Insurance in 2025

Average cost per unit or building (benchmarks).
Unit-level HO-6 averages across the U.S. vary; reputable industry compilations place average condo owner premiums in a broad range (commonly a few hundred to over $1,000 annually depending on state and coverage). Association master policies are priced per-property and scaled to replacement cost; industry practitioners often convert association premium to a per-unit figure for budgeting, and $500–$1,500 per unit annually is a reasonable ballpark for higher-risk or older coastal properties — though local results can differ widely.

Factors: location, property age, flood zones, coverage limits.

• Geographic risk (hurricane, flood, wildfire, earthquake).
• Building construction, age, and code compliance.
• Claims history, deductible levels, and reserve health.
• Market reinsurance costs and insurer appetite.

Cost-saving strategies for associations.

• Improved loss control: roof replacement, stormproof windows, drainage improvements.
• Competitive procurement: soliciting multiple bids from carriers and working with brokers specialized in community associations.
• Captives or pooled programs for associations with similar risk profiles (when available).
• Smart deductible design: balance premium savings with reserve and assessment capacity.

Why Every Condo Owner Should Understand the HOA Master Policy

Understanding the master policy helps owners anticipate where responsibility sits, whether they need interior building coverage on their HO-6, and how potential special assessments would be handled. Review the master policy and the declaration at purchase and again annually — this helps avoid duplicate coverage, gaps, or surprise out-of-pocket costs.

Expert Tips for Condo Associations & Owners

• Choose the right insurer: prioritize carriers with condo experience and solid claims service; examples of nationally recognized insurers that offer condo-related products include State Farm and Allstate, but also evaluate specialty commercial carriers. Check AM Best or similar ratings.
• Annual policy reviews and 2–3 year appraisals/reserve studies.
• Require sufficient loss assessment coverage on unit owner HO-6 policies.
• Document maintenance & inspections: keep logs, engineering reports, repair receipts.
• Consult independent advisors: independent brokers or risk managers can identify gaps that captive agents might miss.
• Communicate: boards should explain policy type, deductible size, and likely owner responsibilities in plain language to reduce conflict after a loss.

Real-World Example — Condo Association Claim Scenario

Example: storm damage and shared repair costs
A late-season storm causes roof damage and widespread water intrusion. The master policy covers structural repairs up to the limit but has a $50,000 deductible and a $800,000 limit. The total loss is $900,000.

• Master policy covers $750,000 (limit less deductible).
• Shortfall is $150,000 — divided across 75 units → each unit’s special assessment = $2,000.
• Owners with loss assessment coverage on their HO-6 (e.g., $10,000) would file their HO-6 for the $2,000 assessment subject to HO-6 terms and deductible; owners without it pay out of pocket. Progressive

This illustrates how coordination of master policy limits, deductibles, and individual HO-6 endorsements avoids financial surprises.

Conclusion & CTA

Condo Association Insurance (the master policy) is core to preserving property value, protecting community finances, and keeping boards and owners out of legal and financial trouble. In 2025, with market pressures, evolving state rules (especially in Florida), and increasing natural-hazard frequency, both associations and unit owners must confirm adequate limits, coordinate policy types, and ensure owners carry appropriate HO-6 endorsements (especially loss assessment coverage). Clear communication, reserve planning, and periodic appraisals are the practical steps that keep communities resilient.

👉 Before reviewing your condo insurance policy, ensure your finances are secure. Use our free Emergency Fund Calculator to find out how much you should have saved for unexpected property expenses.

Condo Association Insurance FAQs