Condominium insurance divides risk between the unit owner and the homeowners association through policy types and the condominium declaration. Understanding where association coverage ends and personal responsibility begins reduces disputes after damage and clarifies financial exposure.
Association responsibilities
The association commonly carries a master policy that covers the building structure and common elements such as roofs, exterior walls, hallways, elevators, and landscaping. The Community Associations Institute explains that this policy generally insures the condominium property described in the declaration and can be written as all-risk or named-peril coverage, with a deductible that may be assessed to owners in the event of a claim. Associations also typically purchase directors and officers liability and fidelity bonds to protect governance and funds. Flood insurance is usually separate; the Federal Emergency Management Agency notes standard property policies exclude flood, so the association must explicitly obtain flood coverage for common property if the building is in a flood-prone area. These coverages and the allocation of deductibles are governed by the declaration and bylaws and by state condominium statutes.
Owner responsibilities
Individual owners generally need an HO-6 or condominium unitowners policy to insure personal property, interior walls, fixtures, and improvements made to the unit. The Insurance Information Institute explains that HO-6 policies typically cover personal liability, medical payments, loss of use, and walls-in structural items not covered by the master policy. Owners should verify whether the association’s master policy covers “walls-in” and built-in appliances; if not, the unitowner must insure those items. Loss assessment coverage on an HO-6 helps owners pay their share of association deductibles or uninsured claims assessed against all owners. Separate coverage is frequently required for earthquakes and floods because standard policies exclude these perils; FEMA and private-market guidance emphasize obtaining specific policies where exposure exists.
State law, the declaration, and the master policy determine gaps and responsibilities. When documents are ambiguous, disputes over repair obligations and assessment allocation can arise, affecting personal finances and the community’s recovery timeline. Clear review of the master policy and the declaration, and consultation with a licensed insurance agent or attorney, helps owners and boards match insurance purchases to legal obligations and local environmental and cultural risks.