Association coverage
The Association Master Policy, Explained
The master policy is the building-level insurance the association carries for the structure, common elements, and its own liability, funded collectively through assessments.
A master policy is the association's own property and liability insurance, covering the building structure, common elements, and the board's liability exposure, with the exact interior boundary set by the declaration rather than by the policy itself. It does not cover an owner's personal property or, in many buildings, interior finishes, which is why every unit owner also needs an individual HO-6 policy to close that gap.
What it covers
The master policy is purchased and owned by the association and funded through regular assessments, not by any single owner. At its core it insures the building structure, roof, and common elements such as hallways, lobbies, elevators, pools, and shared mechanical systems like boilers and centralized HVAC equipment, typically on a replacement-cost basis.
Most master policies also package in the association's general liability coverage, responding to third-party injury claims on common property, along with directors and officers coverage for the volunteer board and fidelity coverage protecting against theft of association funds. Depending on how the declaration allocates responsibility, the policy may reach further into each unit under an all-in or original-specifications structure, or it may stop at the unfinished walls under a bare-walls structure.
What it excludes
The master policy never covers an owner's personal property, furniture, electronics, or clothing inside the unit; that is squarely the territory of the owner's own HO-6 policy. Under a bare-walls allocation it also excludes cabinetry, flooring, fixtures, and interior finishes, leaving those to each owner.
It generally does not pay an owner's additional living expenses if a unit becomes temporarily uninhabitable after a covered loss, and it does not cover flood damage unless a separate flood policy is in place, which matters for buildings in flood-prone areas regardless of whether the building has flooded before. The association's own deductible, which can be sizable after a named storm or major water loss, is typically the owners' collective responsibility and can turn into a special assessment.
Who requires it
The declaration itself generally obligates the association to maintain the master policy as a condition of the governing documents, and the board carries a fiduciary duty to keep it in force and adequately valued. Mortgage lenders backing loans on individual units, including those sold into the secondary market or insured through FHA or VA programs, also expect the master policy to meet their project eligibility standards before they will finance a purchase or refinance.
Management companies overseeing day-to-day operations typically require proof of the current master policy on file, and vendors working on the property will often ask for it as part of confirming how liability is structured across the building.
How limits are chosen
Property limits should track a current replacement-cost estimate for the building, refreshed periodically rather than carried forward year after year with a flat inflation adjustment. An outdated valuation is one of the most common reasons a board discovers it is underinsured only after a major loss, when a claim settles well below what it actually costs to rebuild.
Liability limits deserve a look at the association's amenities and claims history, since a building with a pool, gym, or elevator carries materially more exposure than one without. Boards evaluating their master policy at renewal should also model what a mid-size claim would cost out of pocket at the current deductible and whether reserves could absorb it without triggering a special assessment.
Illustrative claim scenario
A failed roof drain after a heavy storm
A clogged roof drain backs up during a multi-day storm, sending water down through a top-floor hallway and into two units below. The master policy's property coverage pays to repair the roof, the common hallway, and the structural drywall and subfloor in the affected units, consistent with the declaration's allocation. Each affected owner's HO-6 policy then picks up flooring, cabinetry, and personal property, while the association's deductible for the event is absorbed by reserves rather than passed on as a special assessment because the board had planned for it.
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