HOA Master Insurance Policy: What It Covers for Condos and HOAs

Master insurance on a condo is the property and liability policy the association buys to insure the building structure, common areas, and the association itself. Unit interiors, personal belongings, and owner liability fall to each owner's HO-6 policy, with the dividing line set by the declaration.

When a roof leaks, a pipe bursts, or someone falls in the lobby, the first question is always the same: does the master policy pay, or does the unit owner's policy pay? This guide answers it for board members, property managers, and owners, including the Illinois rules that decide what an association has to carry.

Condo master insurance vs HOA master policy

The two terms describe the same kind of policy bought by two kinds of associations. A condo master policy is purchased by a condominium association, where owners hold title to the air space inside their unit and an undivided share of the common elements. An HOA master policy is purchased by a homeowners association, usually in a townhome or single-family community, where owners hold title to their lot and the association owns clubhouses, roads, pools, and other shared property.

The practical difference is how much building the association insures. In a condominium, the master policy almost always insures the building shells and, in Illinois, the units themselves to at least the bare walls. In a townhome or single-family HOA, the master policy may insure only the common property while each owner insures their own home with a standard homeowners policy. Your declaration decides, not the label.

What does HOA insurance cover (and what it does not)

A master program is usually several coverages on one or more policies. Most associations carry the following; the first two are mandatory for Illinois condominiums.

• Property coverage: roofs, exterior walls, hallways, lobbies, elevators, clubhouse, pool, garages, fences, signage, and in a condominium the units themselves to the extent the declaration requires.
• General liability: injury or property damage claims arising from common areas or association operations.
• Directors and officers: defends board members against claims over decisions, elections, assessments, and enforcement.
• Fidelity or crime: theft of association funds by a board member, employee, or manager.
• Equipment breakdown: boilers, HVAC, elevators, and electrical panels that fail mechanically.
• Ordinance or law: the extra cost to rebuild to current code after a covered loss.
• Umbrella: higher liability limits over the primary policies.
• Workers compensation: required once the association has employees.

What the master policy does not cover belongs to the owner's HO-6: furniture and belongings, upgrades beyond the original build, additional living expenses if the unit is unlivable, personal liability inside the unit, and the owner's share of a master policy deductible or special assessment. Flood and earthquake are excluded from a standard master policy unless added.

Bare walls, single entity, all-in: fixtures explained

This is the term that decides who pays for cabinets, flooring, and fixtures after a loss, and it is the most common source of disputes. The insurance industry recognizes three approaches, defined by the International Risk Management Institute (IRMI, read October 18, 2026), and your declaration names one of them.

So, are HOA insurance fixtures covered? Under bare walls, no; under single entity, only the original ones; under all-in, yes including upgrades. Owners should set the Coverage A limit on their HO-6 to match the gap their declaration leaves. Note that under Illinois law a condo association may choose not to insure improvements and betterments installed by owners, and if it does insure them it can assess the extra cost back to those units (765 ILCS 605/12(b)).

HOA hazard insurance

Lenders, closing attorneys, and some older declarations use the phrase HOA hazard insurance. It is not a separate product. It means the property portion of the master policy, the part that pays to repair or rebuild the buildings after fire, wind, hail, water damage from a burst pipe, vandalism, and the other perils on a special form policy.

When a mortgage lender asks for the association's hazard insurance certificate, they want the master policy's evidence of property coverage showing the building limit, the deductible, and the lender as mortgagee or loss payee if applicable.

Two numbers on that certificate matter most to an owner. The building limit should equal full replacement cost, not market value. The deductible, especially a separate wind and hail percentage deductible, is the amount owners may be assessed after a storm, which is why every owner needs loss assessment coverage on their HO-6.

HOA insurance vs homeowners insurance

The master policy and the owner's policy are designed to meet in the middle, not overlap. The table below shows who pays for what in a typical bare walls condominium. Your declaration may shift lines between the columns.

Who pays the master policy deductible?

The declaration decides, and in Illinois the Condominium Property Act gives the board three options after damage to a unit or the common elements: pay the deductible as a common expense, assess it against the owner who caused the damage after notice and a hearing, or require the owners of the affected units to pay it (765 ILCS 605/12(c)).

Boards should put the rule in writing and tell owners, so each owner can buy enough loss assessment coverage on the HO-6 to cover it.

Pipe burst inside a wall, bare walls declaration: the master policy repairs the wall to the unfinished surface and the association applies its deductible rule. The owner's HO-6 pays for drywall finish, flooring, cabinets, and belongings.

Wind and hail roof damage, 2 percent wind deductible on a $10 million building: the deductible is $200,000. If the declaration spreads it as a common expense across 80 units, each owner faces a $2,500 assessment, which loss assessment coverage on the HO-6 pays.

Slip and fall in the lobby: the master general liability policy defends and pays. If the verdict exceeds the primary limit, the association's umbrella responds.

Illinois condo insurance requirements

Illinois is one of the states that spells out association insurance in statute. For condominiums, the rules are in Section 12 of the Illinois Condominium Property Act, 765 ILCS 605/12 (read October 18, 2026, current through Public Act 98-762, effective June 1, 2015). The board must obtain and maintain:

Townhome and other non-condominium associations fall under the Common Interest Community Association Act instead. That Act does not set a property or liability minimum; it leaves those to the declaration.

It does require fidelity insurance for associations with 30 or more units, in the maximum amount commercially available or reasonably required to protect association funds, and requires any management company that handles association money to carry a fidelity bond (765 ILCS 160/1-55, read October 18, 2026). Our Illinois HOA insurance requirements guide goes deeper on both statutes.

Cost drivers and common gaps

Master policy premium is driven by total building replacement value, construction type and age, roof condition, number of units, amenities, wind and hail exposure, deductibles, loss history, and how well the association manages vendors and water risk. Our HOA insurance cost page covers typical ranges by association size. Estimates only; exact premium depends on revenue, exposures, limits, and loss history, and is confirmed by a producer.

The gaps we fix most often when we take over an association: a building limit that has not kept up with construction costs, a wind and hail deductible nobody told the owners about, missing ordinance or law coverage, no equipment breakdown on a building with elevators or boilers, D&O written with a narrow definition of insured, and no system for collecting certificates of insurance from vendors.

How Pro Insurance Group works with associations

We place HOA insurance and condo association programs for boards and property managers across Illinois and 40 plus states, shopping 20 plus carriers with no agency fees.

Every placement starts with a declaration review, so the coverage form on the policy matches the one in your governing documents, and ends with a one-page owner summary the board can hand out so every owner knows what their HO-6 needs to cover. Condominium boards can see the condo-specific program on our condo association insurance page.

Frequently asked questions

It is the policy the condominium association buys to insure the building structure, common areas, shared systems, and the association's liability. Owners insure their unit interior, belongings, and personal liability with an HO-6 policy, and the declaration sets where one policy stops and the other starts.

Property damage to the buildings and common areas, general liability for injuries in shared spaces, directors and officers liability for the board, fidelity coverage for association funds, and often equipment breakdown, ordinance or law, and umbrella coverage. It does not cover an owner's belongings, upgrades, loss of use, or personal liability.

It depends on the coverage form in your declaration. Bare walls excludes fixtures entirely. Single entity covers the original builder-installed fixtures but not your upgrades. All-in covers fixtures including upgrades. Check the Insurance section of your declaration and set your HO-6 Coverage A to fill the gap.

HOA hazard insurance is the lender's term for the property portion of the master policy, which pays to repair or rebuild the buildings after fire, wind, hail, and other covered perils. When a lender asks for it, they want the master policy certificate showing the building limit and deductible.

No. HOA insurance is the association's master policy for shared property and association liability. Homeowners insurance, or an HO-6 for condo owners, is the owner's personal policy for the unit interior, belongings, loss of use, personal liability, and loss assessment. Owners need their own policy even when the association carries a master policy.

Under 765 ILCS 605/12, property insurance at full insurable replacement cost on the common elements and units, general liability of at least $1,000,000, a fidelity bond if the association has 6 or more units, and directors and officers coverage at a level the board deems reasonable. Townhome associations under the Common Interest Community Association Act need fidelity insurance at 30 or more units and otherwise follow their declaration.

The declaration decides. In Illinois, the Condominium Property Act lets the board pay the deductible as a common expense, assess it against the owner who caused the damage after notice and a hearing, or require the owners of the affected units to pay it (765 ILCS 605/12(c)). Owners cover their share with loss assessment coverage on the HO-6.

Loss assessment is an HO-6 coverage that helps pay an owner's share when the association assesses owners for a covered loss, including some master policy deductibles, subject to the policy's terms and limits. Set the limit at least high enough to cover your share of the master policy deductible, especially a percentage wind and hail deductible.

They are informal names for the coverage forms. Walls-out is the same as bare walls: the master policy stops at the unfinished interior surface. Walls-in usually describes a single entity or all-in form, where the master policy also covers interior fixtures and finishes. Your declaration names the form that applies.

Usually, in a condominium. The roof is a common element insured by the master property policy, less the deductible. In a townhome or single-family HOA, the roof may be the owner's responsibility under their own homeowners policy. Check the insurance and maintenance sections of your declaration.

Not unless the association adds it. A standard master property policy excludes flood and earthquake; both require a separate policy or endorsement.

It depends on the building's replacement value, construction, age, number of units, location, deductibles, and claims history. It is funded through association dues rather than billed to owners individually, and a producer prices it to the association's specific exposures.

Unit owner instead? Get an HO-6 quote built around your declaration.