How Does the HOA Master Insurance Policy Affect Condo Buyers in Florida?
The condo association master insurance policy affects what you need to insure individually, your lender requirements, and the overall cost of ownership. Here is what Florida condo buyers need to understand.
How Does the HOA Master Insurance Policy Affect Condo Buyers in Florida?
The condo association's master insurance policy is one of the most important factors in understanding the true cost of condo ownership in Florida. It determines what the association covers, what you need to insure individually, and what your lender requires.
What the Master Policy Covers
The master policy insures the building and common areas. There are two main types:
Bare Walls Coverage (Studs Out): The master policy covers the building structure — exterior walls, roof, common areas — but not the interior of individual units. Everything inside the unit walls (flooring, cabinets, fixtures, appliances, interior walls) is the owner's responsibility to insure.
All-In Coverage (All Inclusive): The master policy covers the building structure AND the original fixtures and finishes inside the units (as originally built). Owners are responsible for insuring improvements and betterments (upgrades above the original standard) and personal property.
What to do: Review the master policy to determine which type of coverage the association has. This determines what your individual HO-6 policy needs to cover.
Your Individual HO-6 Policy
As a condo owner, you need an individual HO-6 (condo unit owner) policy that covers:
- Interior of the unit (for bare walls coverage associations)
- Improvements and betterments (upgrades above the original standard)
- Personal property
- Liability coverage
- Loss assessment coverage (covers your share of a special assessment resulting from an insured loss)
Lender Requirements
Your lender will review the master policy as part of the condo project approval process. Lenders require:
- Adequate building coverage (typically replacement cost)
- Liability coverage
- Fidelity bond coverage (for associations with significant funds)
- Flood insurance (if the building is in a flood zone)
If the master policy does not meet lender requirements, the lender may not approve the loan.
FAQ
What is loss assessment coverage?
Loss assessment coverage pays your share of a special assessment levied by the association to cover an insured loss that exceeds the master policy limits. It is an important coverage for condo owners.
Does the master policy cover flood damage?
It depends on the association. Some associations carry flood insurance on the building; others do not. Review the master policy carefully.
How do I find out what type of master policy the association has?
Request a copy of the master policy from the association or the listing agent. Your insurance agent can review it and advise you on what individual coverage you need.
Buying a condo on the Emerald Coast? I can help you understand the master policy and what individual coverage you need.
— Kinsey Haddock P.A., Broker Associate | Coldwell Banker Realty — Panhandle | License #BK3253849
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Written by
Kinsey Haddock P.A.Kinsey Haddock P.A. is a Broker Associate and REALTOR® with Coldwell Banker Realty, specializing in coastal real estate across the entire Florida Panhandle — from St. George Island and the Forgotten Coast to Panama City Beach, Scenic Highway 30A, and Destin.