CONDO, RENTERS AND LANDLORD

HOA master policy: what the association insures and what you still have to

An HOA master policy is the property and liability insurance the association buys for the things it is responsible for. In a condominium that is usually the building shell and shared areas; in a planned community it may be only the clubhouse, pool and roads, with each owner insuring the house. Lenders sort the cases the same way. The question that matters is where the master policy ends and yours begins, and whether anything falls between.

General information, not legal or insurance advice. Lender rules are from the Fannie Mae Selling Guide as dated below and apply to loans Fannie Mae buys; your association's documents and your state's law control. Florida's condominium statute was read as an example of a state that writes the rules down, and no other state's law was checked. Dollar figures are invented illustrations. Flood insurance is separate from a homeowners policy.

Condo, planned community, co-op: the project type decides

Most confusion about "the HOA's insurance" comes from using one word for three arrangements. A condominium owner holds title to a unit and an undivided share of common elements. A planned unit development, or PUD, owner holds title to a house or townhome and the association owns the common areas. A co-op shareholder owns shares in a corporation that owns the building. The Fannie Mae Selling Guide, section B7-3-03 as updated August 5, 2026, uses the project type to decide whether a master policy is required at all.

For an owner, the table reads two ways. First, "does the HOA insure my house?" has a different answer in a PUD than in a condo, and in a PUD it is usually no. A homeowner in a planned community who assumes the master policy covers the roof of their townhome can be uninsured on the largest asset. Second, in a condo the association's documents, not the lender's rules, decide how far the master policy reaches into the unit. The lender rule only requires that whatever the master leaves out, the owner insures.

Bare walls, single entity, all-in: three words for how far the master reaches

Owners and agents shorthand the depth of a condo master policy with three phrases, and the top search results lead with them, so they are worth defining before the lender rules. The phrases are industry usage; none is a defined term in the Fannie Mae text we read, and the association's declaration controls what any of them means in a given building.

The Insurance Information Institute's condo guidance, cited in our HO-6 guide, describes the first two patterns: associations that insure the units as originally built, leaving the owner responsible for alterations, and associations that insure only the bare walls, floor and ceiling, leaving cabinets, built-in appliances, plumbing, wiring and fixtures to the owner. The all-in label is the market's name for the broadest version, which this page treats as industry shorthand rather than a source-backed definition. Florida's statute is a written-down version of the middle pattern: the association's policy covers the condominium property as originally installed or replaced with like kind and quality, and excludes a listed set of items serving only the unit, as the loss assessment guide explains.

Which phrase describes your building is a question for the declaration and the master policy's declarations page together. The Fannie Mae rule below treats all three the same way: whatever interior or improvements the master leaves uncovered, the borrower must insure, and the lender's test is the coverage amount needed to restore that part of the unit.

What the master policy has to contain for a Fannie Mae loan

The same Selling Guide section lists what a qualifying master policy must include. It reads as a checklist an owner can use, whether or not the loan is a Fannie Mae loan, because it states the structure an association's insurance is expected to have.

Notice what the list does not contain. It names no liability or fidelity coverage; those requirements sit in a separate chapter of the guide and are covered in the next section. It sets no flood requirement either; flood sits in a separate section of the guide, B7-3-06, which we did not read. And the statement that the master policy is primary and does not contribute with the owner's policy sets the order of payment: the master pays first for what it covers, which fits Florida's rule, noted in our loss assessment guide, that a unit owner policy must say it is excess over other insurance on the same property.

Liability and fidelity: the other two policies in an association's program

"Master policy" in everyday use usually means the property policy, but an association's insurance program has others, and the Fannie Mae text for condo and co-op projects names two. General liability insurance, under section B7-4-01 (08/05/2026), is required for all condo and co-op projects except those that qualify for a waiver of project review. The policy must cover commercial spaces owned by the association even if leased to others, and bodily injury and property damage resulting from the operation, maintenance or use of the common elements and any other areas under its supervision. The amount must be at least $1 million for bodily injury and property damage for any single occurrence. The association must be the named insured, with premiums paid as a common expense. And the policy must have a separation of insureds or severability of interests provision, or an endorsement that does the same job, so that an insurer cannot deny a unit owner's claim because of negligent acts of the association or of other unit owners.

That last provision is easy to overlook and valuable to an owner. Without it, an owner injured by an association's negligence, or an owner sued after a neighbor's act, could find the association's policy refusing to respond to the owner's own claim because another insured caused the loss. The requirement tells you what to look for on the declarations: either the words separation of insureds or severability of interests, or a named endorsement. The text of the section we read does not apply the general liability requirement to planned developments as it does to condos and co-ops, so a PUD owner should ask the association what liability coverage it carries rather than assuming the same rule.

Fidelity or crime insurance, section B7-4-02 (08/05/2026), covers the dishonest or fraudulent acts of anyone who handles or is responsible for funds held or administered for the association, whether or not the person is paid, and must include coverage for the acts of any management agent. It is required for all condo and co-op projects except those that qualify for a waiver of project review, projects of 20 units or fewer, and projects that would need coverage of $5,000 or less. A management agent's own policy, with the agent as named insured, is not an acceptable substitute for a policy in the association's name that covers everyone with access to its funds. The amount depends on financial controls. If the association or its management company adheres to at least one of three controls (separate working and reserve bank accounts with the bank sending monthly statements directly to the association; a management company that keeps separate records and accounts for each association and cannot draw on or transfer from the reserve account; or two board members signing any check on the reserve account), the coverage must equal at least three months of assessments on all units. If not, it must equal the maximum funds in the custody of the association or its management agent at any time. In states with their own statutory fidelity requirements, Fannie Mae accepts those in place of its own.

Run the arithmetic for an 80-unit condominium that collects $380 per unit per month in assessments. Three months of assessments on all units is 80 x $380 x 3 = $91,200. If none of the controls is in place and the working and reserve accounts together hold up to $1,400,000 at a peak, the requirement becomes $1,400,000. The financial controls are therefore worth a real amount of premium, and they are also the answer to a common owner question about how the board protects reserve money. Florida's statute, covered further down, asks for the same thing in different words: bonding of persons who control or disburse funds, in the maximum amount in the custody of the association or its management agent at any one time.

The deductible: 5 percent of what, or $50,000 of what

Deductibles are where a master policy does its damage to unit owners, because the association's deductible is spread back onto owners. The guide caps the maximum two ways. A per-occurrence deductible may not exceed 5 percent of the master property insurance coverage amount for all required perils. Alternatively a master policy with a per-unit deductible may not exceed $50,000 per unit. When the policy has separate deductibles for particular perils such as windstorm or wildfire, each must meet the applicable maximum. A deductible buy-back policy bought by the association can be used to meet the maximum if it meets the other property insurance requirements.

The two caps feel very different in practice, as made-up building figures show. A condo building has a replacement cost value of $24,000,000. The 5 percent per-occurrence cap is $1,200,000, which is an association-wide figure that a reserve fund or an assessment would have to meet. A fire damages three units. If the master policy instead uses a per-unit deductible of $20,000, the deductible is $20,000 for each damaged unit, $60,000 for the three, and each owner's share of it may come back through the association. The cap for a per-unit deductible is $50,000 per unit, so at the ceiling the same fire would carry $150,000 of deductible. The two designs spread the same fire very differently: one large sum owed by the association, or a modest sum on each unit that was hit.

The per-unit design triggers a rule on the owner's side. Under section B7-3-04, the unit owners policy for a unit in a building whose master policy has a per-unit deductible must have a coverage amount at least equal to the per-unit deductible, and the policy must include coverage for the specific perils the per-unit deductible applies to. In the illustration, an owner of a unit in a building with a $20,000 per-unit deductible needs at least $20,000 of unit owner property coverage even if the master policy covers everything inside the walls. The reason is simple: that deductible comes back as a charge, and the unit owner policy is what pays it.

What your own policy must do, in Fannie Mae's words

Section B7-3-04, also updated August 5, 2026, sets the unit owner's side. A unit owners policy is required when any portion of the interior of the unit or improvements to the unit are not covered by the master policy, or when the master policy has a per-unit deductible. It should be on a Special form or equivalent and include fire or lightning, explosion, windstorm including named storms, hail, smoke, aircraft, vehicles, and riot or civil commotion. The minimum coverage amount is the greater of an amount sufficient to restore the part of the interior or improvements not covered by the master policy to its condition before a loss, or the per-unit deductible where there is one. Loss settlement must be on a replacement cost basis. The maximum deductible is the greater of 5 percent of the property insurance coverage amount or $2,500. The sizing worksheet in our HO-6 versus HO-3 guide shows how to estimate the first of those two amounts for a unit.

The guide also recognises that insurers sometimes write personal property and structures other than buildings on an actual cash value basis, and treats that as acceptable. For the lender, the point of the unit owner policy is the interior and the deductible. For the owner, belongings and liability and the assessment line sit around it, and the loss assessment guide explains the last of those.

New communities and shared policies

Builder turnover and shared policies matter to buyers of new construction and to members of small associations. While a project is still under development, it may be covered by the builder or developer's own property policy if that policy provides coverage equivalent to the project requirements. When the builder's policy ceases under its terms, the association must obtain a master policy that meets Fannie Mae's requirements, so the changeover date is a date to ask about at turnover, because a gap is possible between the end of one policy and the start of the next. And separate projects built by the same developer are treated as affiliated while the developer still controls them, which ends when the builder's coverage ends.

Unaffiliated projects generally may not share one master policy. A policy that covers several unaffiliated projects can still work if it provides a dedicated coverage amount for each project that is sufficient to cover the full replacement cost value of that project's improvements, including common elements and residential structures. For an owner, the check is plain: the master declarations should show a limit that belongs to your project, not a blanket limit shared across a management company's portfolio, unless the policy gives each project its own dedicated amount.

Florida writes the association's duties into statute

Florida Statutes section 718.111(11) governs condominium association insurance and shows what a state rule can add to the lender rules. It requires every condominium association to have adequate property insurance regardless of what the declaration says, and it lets the amount of adequate coverage for full insurable value or replacement cost be based on an independent insurance appraisal or an update of one, with the replacement cost determined at least once every 3 years. Deductibles are set by the board, must be consistent with industry standards and prevailing practice for communities of similar size and age, and may be based on available funds, including reserves, or predetermined assessment authority at the time the insurance is obtained, with the amount established at a board meeting. An association must also maintain insurance or fidelity bonding for people who control or disburse its funds, covering the maximum funds in the custody of the association or its management agent at any one time, at the association's cost.

The statute also contains allocation rules for the cost of repairs. Deductibles and damage above the association's coverage are a common expense. A unit owner is responsible for the part not paid by insurance if the damage is caused by the owner's or their family's, occupants', tenants', guests' or invitees' intentional conduct, negligence, or failure to comply with the declaration or the association's rules, without compromising the insurer's subrogation rights. The association is not obliged to pay for repairs as a common expense if the loss was known or should have been known to a unit owner and was not reported to the association until after the association's insurance claim was settled with finality or denied as untimely. And an association may, with the approval of a majority of the total voting interests, opt out of the allocation rule and allocate repair expenses as the declaration provides. The Florida coverage line, what is inside the association's policy and what the unit owner must insure, is covered in our condo loss assessment guide, so we leave it there.

Those Florida rules do not describe any other state. In states that have written less, the declaration, the bylaws and the board's own insurance policy fill the space, which is why the documents in the next table matter.

What to ask the board for, and what each document shows

The seam between the two policies

The practical risk in any HOA is a seam: a loss that neither policy pays. Seams appear in three places. The first is the interior, where the declaration says the owner insures improvements and the owner's policy is written too low. The second is the deductible, where the association's deductible lands on owners as an assessment and the owner's loss assessment limit is small. The third is the peril, where the master policy excludes or limits something the owner assumed it covered, such as water backup or earthquake, and the Fannie Mae text requires a stand-alone policy for a required peril but not for peril sets beyond the list. Owners who read the master declarations page, the deductible line and the endorsement list once a year are the ones who find the seam before a claim does. If a loss does land in a seam, the denial appeal guide shows how to answer the insurer, and the force-placed guide covers what a lender does when a required policy lapses.

To set the unit owner's side against published prices, our condo insurance cost page gives NAIC's HO-6 averages for every state and coverage band.

Owners who rent a unit by the night should check the association's rental rules and their own coverage; our short-term rental hosting guide explains the policy side.

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